Tennessee gas prices averaged $2.02 Sunday, nearly 2 cents more than the week before; 3 cents more than last year. The national average price for a gallon of regular unleaded was $2.25 – 1-cent less than a week ago, 3 cents more than this time last year, according to AAA.
The most expensive gas price averages in Tennessee were in Memphis at $2.08, Nashville at $2.04 and Knoxville at $2.01. The least expensive gas price averages in Tennessee were in Chattanooga at $1.93, Clarksville-Hopkinsville at $1.98 and Johnson City-Kingsport-Bristol at $1.99.
“Gas prices could inch a little higher this week,” said Mark Jenkins, spokesman for AAA. “Refineries are running on all cylinders, cutting into excess crude stocks. That helped push oil prices higher last week, which puts upward pressure on prices at the pump. The increase on the retail side may only amount to as much as 5 cents by the end of the week. While this could be the start of a gradual uptick in gas prices, drivers are likely to continue saving at the pump compared to what they paid earlier this year.”
At the close of Friday’s formal trading session on the New York Mercantile Exchange, West Texas Intermediate crude oil was up 46 cents to settle at $46.54. The market has been trending upward slightly after EIA’s weekly report showed that last week, crude oil inventories dropped below 500 million barrels for the first time since late January. Moreover, total inventories of crude are just 4.4 million barrels more than last year, showing that the surplus is draining – albeit rather slowly.
The market will now turn its attention toward OPEC to determine if it will maintain compliance with its agreement to limit production through March 2018 and curtail rising crude production levels from member countries that are exempt from the agreement. In the meantime, drivers are still poised to reap the benefits of the crude glut and continued strong gasoline output rates from refineries.
According to the Energy Information Administration’s report for the week ending July 7, gasoline demand did not hit an all-time high last week, but it did reach a top five milestone at 9.786 million barrels per day. Demand has been consistently strong based on EIA’s measurements for this summer, and for the most part, it is keeping pace with last summer. The rolling four-week average stands at 9.711 million barrels per day, which is nearly identical to the average for the summer of 2016 at this time.
The Energy Information Administration revised its forecast for crude oil prices to average $49 per barrel in 2017 and $50 per barrel in 2018, down $2 per barrel and $4 per barrel from the previous forecast.
U.S. crude oil production averaged an estimated 8.9 million barrels per day in 2016 and is forecast to average 9.3 million barrels per day in 2017. EIA forecasts production to average 9.9 million barrels per day in 2018, which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million barrels per day set in 1970.
The EIA also forecasts U.S. regular gasoline retail prices will average $2.32 per gallon in 2017 and $2.33 per gallon in 2018.