Gasoline in the U.S. climbed this week, boosted by a surge in oil, and is expected to reach the highest level for this time of year since 2008.
The pump price averaged $3.686 a gallon yesterday, up 1.2 cents from a week earlier, data posted on the Energy Information Administration’s website late yesterday show. Oil, which accounts for two-thirds of the retail price of gasoline, gained $2.49 a barrel on the New York Mercantile Exchange in the same period and $4.88 in the month ended yesterday.
The jump in crude, driven by concern that the crisis in Iraq will disrupt supplies, may boost pump prices by 10 cents a gallon at a time when they normally drop, according to forecasts including one from the EIA.
“If things deteriorate even more, the spike could be even bigger than that,” Phil Flynn, a senior market analyst at Price Futures Group in Chicago, said by telephone. “If it weren’t for the situation in Iraq,gasoline would be coming down by now. This will probably keep it elevated all summer. It’s really disappointing.”
Iraq’s sectarian violence showed no sign of abating, with Sunni Muslim militants and government forces fighting to control Tal Afar, in the country’s northwest. Prime Minister Nouri al- Maliki, a Shiite, is trying to reverse the advance of militants who captured Iraqi’s largest northern city of Mosul and other towns last week.
Iraq produced 3.3 million barrels a day of crude last month, trailing only Saudi Arabia among members of the Organization of Petroleum Exporting Countries, data compiled by Bloomberg show. The Persian Gulf country is forecast to provide 60 percent of OPEC’s growth for the rest of this decade, the International Energy Agency said June 13.
The fighting hasn’t spread to the south, which the EIA says is home to three-quarters of Iraq’s crude output. The country’s 2.58 million barrels a day of exports in May were all from the south, Asim Jihad, an oil ministry spokesman, said June 1.
While gasoline prices will remain seasonably high through the summer, a more “stabilized” situation in Iraq would slow the gain at pumps, Michael Green, a spokesman for Heathrow, Florida-based AAA, said by telephone from Washington.
“We’d expect a slow rise in gas prices over the next few days, but we’re not expecting anything dramatic unless the situation further deteriorates in Iraq,” Green said.
Pump prices are 6 cents higher than year-earlier levels, EIA data show. Should gasoline remain above $3.652 a gallon next week, it’ll be at the highest seasonal price since 2008.
West Texas Intermediate crude (NYMEX:CLN14), the U.S. benchmark grade, slipped 59 cents, or 0.6 percent, to $106.31 a barrel on Nymex at 1:37 p.m. New York time. Gasoline futures for July delivery gained 1.22 cents, or 0.4 percent, to $3.084 a gallon.
The EIA, the Energy Department’s statistical arm, projected in a report June 10 that retail gasolinewould average $3.66 a gallon in June. The price depends largely on events in Iraq, Sean Hill, a petroleum economist with the agency in Washington, said by telephone yesterday.
“As things stand right now, you’re looking at probably somewhere around a 5- to 10-cent jump,” he said.
The pump price rose in every region of the U.S. this week, with the biggest gain seen in the Rocky Mountains region, where it increased 2.3 cents to $3.53 a gallon, the EIA said. Both Phillips 66 and Exxon Mobil Corp. reported fires at their refineries in the Billings, Montana, area last week.
The EIA collects information from about 800 filling stations as of 8 a.m. local time on Mondays.