About face on fuel prices

The average U.S. price for both diesel and gasoline made a small but abrupt about-face this week, according to data tracked by the Energy Information Administration (EIA), though costs for both fuels remain well below the marks set at the same time last year.

The average U.S. price for diesel increased 3.5 cents to $3.683 per gallon this week, while gasoline witnessed a 5.5 cent jump to $3.441 per gallon. Diesel prices increased across all U.S. regions except New England and the Rocky Mountains, where costs dipped only slightly by .03 cents and .025 cents per gallon, respectively.

Yet current diesel and gasoline costs remain well below pump prices set during the same week in 2011: 21.6 cents and 23 cents lower per gallon, respectively, the agency noted.

Despite the recent volatile swings in global oil prices due in part to an industry-wide strike within Norway’s petroleum sector and that nation’s government efforts to halt it, EIA still expects oil prices to remain relatively low at least through the early part of 2013.

In the agency’s Short Term Energy Outlook released this week, spot oil prices for West Texas Intermediate (WTI) crude is expected to average about $88 per barrel over the second half of 2012 and the U.S. refiner acquisition cost (RAC) of crude oil to average $93 per barrel – both about $7 per barrel lower than last month's outlook, EIA said.

The agency also expects WTI and RAC crude oil prices to remain roughly at these second half levels in 2013.

However, EIA noted that Brent crude oil spot prices – which provide a more global measure of oil prices – are expected to average $106 per barrel for 2012 and $98 per barrel in 2013, with those price forecasts assuming that world oil-consumption-weighted real gross domestic product (GDP) grows by 2.9% in both 2012 and 2013.

With crude oil prices falling over the last month, EIA lowered its average regular gasoline retail price forecast for the third quarter this year to $3.39 per gallon and expects regular gasoline retail prices – which averaged $3.53 per gallon in 2011 – to average $3.49 per gallon in 2012 and $3.28 per gallon in 2013.

The agency also expects U.S. total crude oil production to average 6.3 million barrels per day (bbl/d) in 2012, an increase of 600,000 bbl/d from last year – the highest level of domestic oil production since 1997. Projected U.S. domestic crude oil production is also projected to keep increasing, reaching 6.7 million bbl/d in 2013.  

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