Wednesday (Nov. 16) WTI crude oil closed at $102.59 per barrel. It’s the first time ever that oil has closed above $100 per barrel in November. And gas prices are going down?
Yes, they are. According to GasBuddy.com, today’s national average price of gasoline ($3.41 per gallon) is notably less than the average price at the pump the last time crude oil traded in the $100-range. It wasn’t long ago. From February through March WTI crude on the New York Mercantile Exchange traded at the $100-plus per barrel level and the retail price of gasoline climbed steadily from $3.50 to $3.90 per gallon during the same period.
“Nobody wants to jinx the downward trend by actually asking the question, but everybody is wondering the same thing: Why are gas prices going down instead of up?” said Gregg Laskoski, senior petroleum analyst for GasBuddy.com.” The answer, we believe, lies in the current disconnect between crude and pump prices. The two usually move in tandem, but this is one of those instances where the exception to the rule occurs, and when that happens, consumers notice immediately.
“WTI is now yielding to the pressure exerted by the increasing importance of Brent crude and the fact that Brent is a more accurate reflection of global value. As a result, WTI’s price is rising to close that gap,” he added.
At the same time, both refinery utilization and total gasoline production have increased according to the most recent data from the Department of Energy. Additionally, gasoline futures are at their lowest level since February 2011 and that facilitates the seasonal decline for wholesale and retail prices.