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US gasoline prices fall as refinery output rises

07.28.2014  | 

US refineries are flexing their muscles and helping lower gasoline prices in the middle of the peak driving season. US gas prices fall 9 cents to $3.58 in largest decrease so far in 2014.

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By DAN MURTAUGH and JESSICA SUMMERS
Bloomberg

US refineries are flexing their muscles and helping lower gasoline prices in the middle of the peak driving season.

The average price for regular gasoline at US pumps dropped 9.04 cents in the two weeks ended July 25 to $3.5795/gal, according to Lundberg Survey. It’s based on information obtained at about 2,500 filling stations by the Camarillo, California-based company. Prices are 9.51 cents lower than a year ago and are at the lowest level since March 21, the survey showed.

Retail prices declined as refineries processed the most petroleum in government records dating back to 1989 in the week ended July 11. Plants in the Midwest exceeded their nameplate capacity during that week.

“It’s really a mid-summer gift,” Trilby Lundberg, the president of Lundberg Survey, said in a telephone interview on July 27. “Refiners have been on a kick to run more crude, run at high rates and to cut price.”

The highest price for gasoline in the lower 48 states among the markets surveyed was in San Francisco, at $4.03/gal, Lundberg said. The lowest price was in Tulsa, Oklahoma, where customers paid an average of $3.23. Regular gasoline averaged $3.83 on Long Island, New York, and $3.96 in Los Angeles.

Refineries processed 16.81 million bpd in the week ended July 18, just off the highs reached the prior week, Energy Information Administration data show.

Gasoline Futures

Plants are taking advantage of the US shale boom, which has raised oil production 65% in the past five years. The increased output has pushed the settlement price of US benchmark West Texas Intermediate futures below European Brent every day since Aug. 17, 2010.

Gasoline futures on the Nymex slipped 4.32 cents, or 1.5%, to $2.8653/gal in the two weeks ended July 25 as supplies grew on strong refinery production.

Gasoline stockpiles increased 3.38 million bbl to 217.9 million, EIA data show. Demand over the four weeks ended July 18 was 8.988 million bpd, 0.6% below a year earlier.

WTI crude rose $1.26, or 1.2%, to $102.09/bbl on the New York Mercantile Exchange in the two weeks to July 25 as supplies at the delivery point in Cushing, Oklahoma, fell to the lowest level since 2008.

Crude inventories in the US fell for the fourth straight week, dropping 3.97 million bbl to 371.1 million in the seven days ended July 18, according to the Energy Information Administration, the Energy Department’s statistical arm.



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