Over the weekend, retail gasoline prices rose over the predicted $2.59 average and currently stand at $2.63. Canadian prices have also risen to 102c/L, but both are well below their year ago amounts, which stand at $3.81 in the U.S. and 131c/L in Canada.

Retail prices have begun to slow their rise the last two days as wholesale prices fell on Friday, putting on hold a rally that had resulted in oil closing over $70 for the first time since June. Prices have come off their weekly highs, thanks to a strengthening dollar, but expect the dollar to lose value after the Federal Reserve stated they were likely to keep borrowing rates near record lows, keeping the dollar weak.

Rising retail prices come as demand for diesel fuel remains remarkably weak and supply of the fuel remains at a record high for this time of year. Gasoline demand has been virtually the only commodity showing any strength, with demand virtually the same as a year ago.

This week will definitely be a more difficult week to forecast than previous weeks, but I believe traders can not continue to ignore bearish fundamentals- record supply, tempered demand, no tropical storms, and a continued weak economy. Prices should fall or stay stable this week, but that won't keep retailers from passing on their higher cost from last week to consumers.

U.S. retail prices will rise to $2.66 by the end of the week while Canadian prices will rise to 103c/L on average. Prices on the market are set to fall after this month as the summer driving season comes to a close and refiners cease production of more expensive summer blended fuels.

Patrick DeHaan
Senior Petroleum Analyst
GasBuddy.com