WASHINGTON, Dec. 13 (UPI) — With crude oil prices on a sustained rally in the wake of deals cut by major producers, U.S. gas prices likely won’t decline, analysis finds.
Motor club AAA reports a national average retail price for a gallon of regular unleaded gasoline at $2.21, snapping a 14-day streak of increases. The national average price is up 1 percent, or about 2 cents per gallon, from last week.
The price for Brent crude oil, which serves as the global benchmark, is up more than 4 percent from last week. Prices are increasing in the wake of agreements reached between members of the Organization of Petroleum Exporting Countries and other producers to cap oil production at certain levels. The move is designed to put a floor under oil prices, which fell below $30 per barrel in early 2016 because supply far outweighed demand.
Brent crude oil was moving in on $56 per barrel early Tuesday. In its weekly retail market report, AAA attributed most of the increase in gas prices to OPEC.
“Retail prices have steadily increased following the news of the OPEC agreement, but the effectiveness of the deal and continued market impacts will hinge on all countries implementing the agreed to production levels,” the motor club’s report read.
The degree to which parties to the agreement hold the line won’t be fully apparent until early 2017. A report from the International Energy Agency said, however, that OPEC was already producing at a record high, though markets are moving more on theoretical potential than fundamental figures.
The West Coast retail market, which is the most expensive market in the country, was the only region to see a decline in gas prices for the Lower 38. The Great Lakes market, meanwhile, remains the most volatile in the country and Michigan took the distinction of recording the highest spike in prices at 9 cents per gallon from last week.
Part of the regional pressure is due to November issues at BP’s refinery in Whiting, Ind., which is the largest in the area.
AAA said a lot depends on OPEC, though retail prices are still just 1.8 percent, or 4 cents per gallon, more than this time last month.
“Traders will continue to watch how OPEC and non-OPEC members move forward with the terms of the agreement starting in 2017,” the report read.
The highest recorded national average was $4.11 per gallon in July 2008.
