“AAA forecasted the streak of gas price declines would come to an end last week,” said Mark Jenkins, spokesman for AAA. “What came as a bit of a surprise was the abrupt U-turn oil prices made after Independence Day. Instead of building on the momentum that pushed oil above $47 a barrel, the rally suddenly ran out of steam, and oil stumbled back below $45. What that means to motorists is a short-lived bump in prices at the pump.”
On Sunday, Tennessee gas prices averaged $2.01. The state average was 1-cent more than last week, 3 cents less than a year ago and 25 cents less than the national average.
The most expensive gas price averages in Tennessee were in Memphis at $2.06, Nashville at $2.04 and Knoxville at $1.97. The least expensive gas price averages in Tennessee were in Chattanooga at $1.90, Clarksville-Hopkinsville at $1.97 and Johnson City-Kingsport-Bristol.
Gas prices for the first 40 days of summer, from June 1 through July 10, averaged the lowest in more than a decade. Prices averaged $2.05 in Tennessee, which is the lowest for the 40-day period since 2004, when gas prices averaged $1.86.
A shift in futures prices effectively brought the pump price plunge to a halt. Oil prices made steady gains, increasing from $42.53 to $47.07 in 13 days, raising the cost of producing gasoline. However, prices at the pump barely had time to respond before oil slumped back below $45 Wednesday. Despite bullish data from the EIA showing strong demand and reduced inventories, fuel production and supply levels remained especially high for this time of year, preventing oil prices from gaining solid footing.
Long-term forecasts remain favorable for motorists. Many analysts are moving to the position that demand levels will not surpass last year’s record highs. Wells Fargo expects oil prices to remain below $50 per barrel for the next 12 months, according to a statement made Wednesday. That would put a ceiling on gas prices of about $2.50, if the forecast holds.
Oil rices moved lower during the week, but settled at $44.23 per barrel Friday – nearly $2 less than Monday’s settlement. Supplies declined 6.3 million barrels or 1.2 percent, yet remained 1.9 percent higher than a year ago. Production increased by 88,000 barrels per day. Domestic crude production during the past four weeks averaged 8.2 percent higher than the same time last year. The total count of U.S. oil rigs reached the highest level since April 2015, after adding seven last week.
Wholesale gas prices pinballed during the week, but settled lost value of about 3 cents. Supplies declined 1.5 percent domestically, yet held steady in the Gulf Coast.
Production increased 0.3 percent domestically, but declined 8 percent at Gulf Coast refineries. Production levels are 8 percent less than the same week last year. Demand surged almost 2 percent compared to the week before. Daily averages remain 2.7 percent less than last year.