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Gas prices rise on strong demand, crude draws

Staff Reports • Updated Aug 1, 2017 at 2:00 PM

Motorists witnessed another round of gas price increases last week. 

Tennessee gas prices Sunday averaged $2.08. The state average was 3 cents more than last week, and 18 cents more than this time last year. 

Gas prices were between $1.90 and $2.35. The price for regular unleaded was below $2 per gallon at fewer than 25 percent of gas stations in Tennessee; the price is less than $2.25 at 93 percent of gas stations in the state.

“Gas prices leveled out over the weekend, but should climb again this week,” said Mark Jenkins, spokesman for AAA. “Strong demand and another round of supply draws pushed the price of crude to its highest point in 9 weeks, and that trend is expected to continue this week. Gas prices should rise 5-10 cents this week, but remain below this year’s highs, set earlier this year.”

The most expensive gas price averages in Tennessee were in Memphis at $2.14, Nashville at $2.11 and Knoxville at $2.05. The least expensive gas price averages in Tennessee were in Clarksville-Hopkinsville at $2.02, Chattanooga at $2.02 and Johnson City-Kingsport-Bristol at $2.04.

The national average price Sunday for regular unleaded was $2.31. After climbing 3 cents in the past week, the national average was 16 cents more than this time last year. So far this year, gas prices averaged $2.32. The price for regular unleaded was under $2 a gallon at only 10 percent of gas stations across the country. Prices were above $2.25 at 53 percent of U.S. gas stations. 

The price per barrel of crude oil pushed higher last week, following news from Organization of the Petroleum Exporting Countries that its members pledged to reduce exports, and the U.S. Energy Information Administration weekly report that showed a decline in crude inventories. At OPEC’s meeting Monday to discuss the status of its production reduction agreement, Saudi Arabia officials said its plans to limit crude exports to 6.6 million barrels per day in August – about 1 million barrels per day below the level last year. Kuwait and the United Arab Emirates officials also agreed to cut exports amid rising fears in the market that growth in production and exports from member countries may be undercutting the cartel’s efforts to restrict supplies and raise prices in the global market. 

Additionally, EIA reported a 7.2 million barrel drop in U.S. crude inventories for the week ending July 21 – a much higher number than expected. All of the news gave investors greater confidence in crude inventories continuing to shrink, leading the price per barrel of crude to move toward highs not seen since the end of May. Higher crude prices will contribute to rising gas prices, so if crude prices continue to push upward, drivers are likely to see it reflected at the pump.

The highest national average price for gasoline so far this year was April 21 at $2.42; the lowest was July 5 at $2.23. The highest average price in Tennessee so far this year was April 20 at $2.18; the lowest was July 5 at $1.99.

Oil prices reached nine-week highs, settling at $49.71 per barrel, nearly $4 more than the week before. Supplies decreased for the fourth consecutive week, falling by 7.2 million barrels to 483.4 million.

Production declined for the first time in a month. At 9.4 million barrels per day, U.S. oil production remained near record levels set June 2015 at 9.6 million. Refineries remain strong, pumping out more product than the week before.

Wholesale prices climbed about 12 cents on the futures market. Supplies remained strong, yet declined for the sixth consecutive week.

Production remained strong, rising 2.9 percent compared to the week before. Demand for the week of July 21 was the strongest since Memorial Day, which was an all-time high.

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