Petroleum & Other Liquids

This Week in Petroleum

Release date: November 22, 2017  |  Next release date: November 29, 2017

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Gasoline prices ahead of the Thanksgiving holiday are higher than last year

The weekly average U.S. gasoline price heading into the 2017 Thanksgiving holiday is $2.57 per gallon (gal), 41 cents/gal higher than it was the week before Thanksgiving last year and 47 cents/gal higher than at the same time in 2015. However, gasoline prices are more than 19 cents/gal lower than the previous five-year average for the same date (Figure 1). Although refinery operations have recovered after hurricane outages, higher crude oil prices, tighter inventories, and stronger demand (measured as product supplied) have all contributed to higher current gasoline prices.

Figure 1. U.S. regular retail gasoline prices

The spot price for Brent crude oil, the primary driver of U.S. gasoline prices, averaged $62 per barrel (b) the week of November 17, an increase of $18/b and $20/b compared with the week prior to Thanksgiving in 2016 and 2015, respectively. U.S. product supplied increased 571,000 barrels per day (b/d) from last year to 9.6 million b/d as of November 17. The strong demand, however, has been met with increasing gross inputs to refineries, which were 16.7 million b/d as of November 17 (based on four-week moving averages), higher than the previous five-year maximum for this time of year. Despite the post-hurricane recovery in refinery runs, ending stocks of total gasoline in the United States as of November 17 were down nearly 13.6 million barrels compared with the same time last year, putting upward pressure on gasoline prices.

Retail gasoline prices vary significantly across the United States as a result of regional supply and demand balances, gasoline specification requirements, and taxes. As of November 20, regular retail gasoline prices were $2.29/gal on the Gulf Coast (Petroleum Administration for Defense District (PADD) 3), $2.50/gal in the Midwest (PADD 2), $2.54/gal in the Rocky Mountains (PADD 4), $2.53/gal on the East Coast (PADD 1), and $3.05/gal on the West Coast (PADD 5) (Figure 2).

Figure 2. Regional regular retail gasoline prices

On August 25, Hurricane Harvey made landfall in Texas as a Category 4 hurricane, causing substantial disruptions to crude oil and petroleum product supply chains. As a result, gross inputs to refineries in the Gulf Coast fell from 9.4 million b/d the week of the hurricane to 6.2 million b/d the following week. Refinery activity has since recovered, and gross inputs are 8.8 million b/d, higher than the previous five-year maximum for this time of year (based on four-week moving averages, Figure 3). However, inventories in the Gulf Coast are 3.7 million barrels lower than 2016 levels as of November 17. In combination with higher crude oil prices, lower inventories are supporting Gulf Coast gasoline prices of $2.29/gal, nearly 37 cents/gal higher than the week before Thanksgiving last year.

Figure 3. Gulf Coast gross refinery inputs

The week of November 20, gasoline prices in the Midwest averaged $2.50/gal, 48 cents/gal higher than the week prior to Thanksgiving last year. Recent repair work to refineries (which was delayed due to Hurricane Harvey) and the partial shutdown of the Explorer pipeline have limited the gasoline supply in the region and contributed to the price increase.

Gross inputs into Midwest refineries were 3.8 million b/d the week of November 17, 176,000 b/d higher than levels prior to Thanksgiving last year. Restricted pipeline flows contributed to inventory levels that are 3.2 million barrels lower than inventory levels the week before Thanksgiving last year. The tighter gasoline supply and falling stocks have contributed, in part, to the increasing gasoline prices in the Midwest. However, resumption of full operations on the Explorer pipeline and the completion of refinery maintenance has contributed to reducing gasoline prices by 5 cents/gal over the past two weeks.

In contrast with prices in the Midwest, gasoline prices on the East Coast have increased in three of the past four weeks. East Coast average regular gasoline prices are up more than 35 cents/gal heading into Thanksgiving compared with the same week last year. East Coast gasoline stocks were 53.5 million barrels as of November 17, 5.5 million barrels lower than the week prior to Thanksgiving last year. Declining imports, which averaged 418,000 b/d the week ending November 17 and were 170,000 b/d lower than the week prior to Thanksgiving last year (based on four-week moving averages), are creating further tightness in gasoline supply on the East Coast.

West Coast retail gasoline prices are often higher than the U.S. average price because of the region’s isolation from additional supply sources, gasoline specifications that are more costly to manufacture, and higher taxes. On November 1, California raised taxes on gasoline by 12 cents/gal, which has contributed to an increase in state gasoline prices of more than 46 cents/gal compared with the same time last year.

U.S. average regular gasoline and diesel prices fall

The U.S. average regular gasoline retail price fell 2 cents from the previous week to $2.57 per gallon on November 20, up 41 cents from the same time last year. The West Coast and Midwest prices each fell three cents to $3.05 per gallon and $2.50 per gallon, respectively, the East Coast price fell two cents to $2.53 per gallon, and the Gulf Coast price fell nearly two cents to $2.29 per gallon. The Rocky Mountain price remained unchanged at $2.54 per gallon.

The U.S. average diesel fuel price fell less than one cent to $2.91 per gallon on November 20, 49 cents higher than a year ago. The West Coast, Midwest, and Gulf Coast prices each fell one cent to $3.38 per gallon, $2.87 per gallon, and $2.69 per gallon, respectively. The Rocky Mountain and East Coast and prices each increased over one cent to $3.00 per gallon and $2.90 per gallon, respectively.

Propane inventories decline

U.S. propane stocks decreased by 1.0 million barrels last week to 73.7 million barrels as of November 17, 2017, 9.8 million barrels (11.7%) lower than the five-year average inventory level for this same time of year. Gulf Coast inventory decreased by 0.5 million barrels, while East Coast and Midwest inventories each decreased by 0.2 million barrels. Rocky Mountain/West Coast inventories rose slightly, remaining virtually unchanged. Propylene non-fuel-use inventories represented 3.5% of total propane inventories.

Residential heating oil and propane prices continue to increase

As of November 20, 2017, residential heating oil prices averaged $2.82 per gallon, 2 cents per gallon more than last week and 44 cents per gallon higher than last year’s price at this time. The average wholesale heating oil price for this week is $2.04 per gallon, nearly 2 cents per gallon more than last week and 49 cents per gallon higher than a year ago.

Residential propane prices averaged $2.42 per gallon, almost 4 cents per gallon more than last week and nearly 36 cents per gallon higher than a year ago. Wholesale propane prices averaged $1.12 per gallon, nearly 4 cents per gallon higher than last week and 50 cents per gallon higher than last year's price.

For questions about This Week in Petroleum, contact the Petroleum Markets Team at 202-586-4522.

Tags: crude oil , financial markets , futures , prices , weekly , WTI (West Texas Intermediate)

Retail prices (dollars per gallon)

Retail price graphs
  Retail prices Change from last
  11/20/17 Week Year
Gasoline 2.568 -0.024 0.413
Diesel 2.912 -0.003 0.491
Heating Oil 2.824 0.021 0.440
Propane 2.418 0.036 0.357

Futures prices (dollars per gallon*)

Futures price graphs
  Futures prices Change from last
  11/17/17 Week Year
Crude oil 56.55 NA 10.86
Gasoline 1.745 NA 0.406
Heating oil 1.947 NA 0.489
*Note: Crude oil price in dollars per barrel.

Stocks (million barrels)

Stock price graphs
  Stocks Change from last
  11/17/17 Week Year
Crude oil 457.1 -1.9 -31.9
Gasoline 210.5 0.0 -13.6
Distillate 125.0 0.3 -24.2
Propane 73.714 -0.966 -28.954