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Spring is arriving across portions of the United States, and the return of warm weather often coincides with a seasonal increase in gasoline prices. Partly, that is due to the switchover that refineries make, to producing summer-blend gas formulations, which are costlier than winter blends. Also, Americans generally start driving more in the spring as vacation travel ramps up. But so far, these impacts aren’t being seen at gas stations. The national average price of regular unleaded actually slipped a few cents this week, and is now at $3.11 per gallon. Diesel is averaging $3.67. Both are little changed from a month ago.
We still look for gas prices to trend higher this spring. But the rise could be muted, with regular-grade gas staying below $3.50 on average nationwide.
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A major reason that retail fuel is holding steady: Crude oil prices have edged lower after trading in a tight range this winter. Benchmark West Texas Intermediate crude recently traded near $69 per barrel. Hopes for a cease-fire between Russia and Ukraine are likely one reason for the recent dip in oil, which had been trading in the low $70s. A cease-fire could lead to reduced sanctions on Russia’s oil exports. Meanwhile, OPEC has been considering whether to restore some of the exports it took off the market in recent years to keep prices higher. And U.S. oil production remains near record highs. So overall, the global oil market does not appear to be lacking for supplies, and may even face a bit of an oversupply situation. We look for WTI to trade from $70 to $75 per barrel this spring as ample supplies are roughly balanced by a seasonal increase in demand.
Natural gas prices have eased a bit, but they remain well above their low levels of a few months ago. The benchmark gas futures contract recently traded near $4 per million British thermal units. Not long ago, it was closer to $2. The cold winter in the United States has helped to trim what had been higher-than-normal supplies of gas in underground storage. In fact, underground storage reservoirs are now less full than normal for this time of year. That should continue to support gas futures prices, keeping them between $3 and $4 per MMBtu this spring.
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