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Economy in Brief

U.S. Gasoline Prices Continue Lower With Crude Costs
by Tom Moeller  October 4, 2011

Economic slowdown are unpleasant words when combined to describe the backdrop for energy prices. Last week, weakness in the economy helped lower the pump price for a gallon of regular gasoline another eight cents to $3.43. Prices were down fifty-three cents since the May peak. Retail prices usually start to ease this time of year with reduced seasonal demand. To account for this pattern, Haver Analytics calculates seasonal factors. As a result, the adjusted gasoline price fell to $3.41 per gallon. Yesterday, the wholesale price for a gallon of unleaded of $2.60 was down from last week's average of $2.76.

A weak economy pulled lower the demand for petroleum products. Gasoline demand fell 2.4% on average during the last four weeks versus last year. Demand for residual fuel oil, used for heating, rose 12.0% y/y but distillate demand slipped 1.0%. Inventories of crude oil and petroleum products fell 3.5% year-to-year compared to 10.0% growth in the middle of 2009.

Indeed, economic weakness helped lower crude oil prices yesterday to $77.61 per barrel from last week's average of $81.45 for a barrel of WTI. They remained down from the late-April peak of $113.93. Brent crude remained relatively expensive versus WTI but yesterday sold for a greatly lessened $103.58 per barrel. Prices peaked at $126.21.

Finally, natural gas prices inched up w/w to $3.81 per mmbtu. That's down sharply from the early-June high of $4.86 and prices remained down from last year's early-January peak of $6.50. Yesterday, prices fell further to $3.60.

The energy price data are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY database. The daily figures are in DAILY and the gasoline demand figures are in OILWKLY

Weekly Price 10/3/11 9/26/11 9/19/11 Y/Y% 2010 2009 2008
Retail Regular Gasoline ($ per Gallon, Regular) 3.43 3.51 3.60 25.7 2.78 2.35 3.25
Light Sweet Crude Oil, WTI ($ per bbl.) 81.45 83.77 88.93 3.9 79.51 61.39 100.16
Natural Gas ($/mmbtu) 3.81 3.78 3.94 0.8 4.40 3.95 8.88
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