Posted in: Gas Prices,
by Patrick DeHaan on Jul 6, 2010 01:47 PM
With the departure of Hurricane Alex, which had little impact on the oil industry, gasoline and oil futures began to fall late last week, and as July 4 came and went, retail prices have begun to move lower as well.
Going into the July 4 weekend, retail prices jumped to $2.78 mid-last week (a rise of 3-cents in one day as retailers took advantage of increased traffic). As the weekend progressed, retailers lowered their prices to an average of $2.74 on July 4. Today, the average price stands at $2.727- a decrease of a nickle in just a few days time.
We can expect retail prices to continue to fall through this week in most of North America, but prices may be slower to fall along the East Coast, as higher demand from power plant backup units keeps demand at higher than normal levels.
It seems that with continued concern about the economy here in the U.S., gasoline prices have little justification to move higher. Demand remains stable, supply remains above average, and with no threat of rapid economic expansion, there's little reason for prices to swing above an average of $3.
I firmly believe at this time that one of the only factors that could successfully push oil prices higher would be for a major storm to organize in the Gulf of Mexico. Barring a major storm, I continue to see prices in the U.S. remain between an average of $2.60-$2.80 for the rest of summer.
Some looming threats to my forecast include the strength of the U.S. dollar. In recent days and weeks, the euro has begun to show signs of improvement, a factor that could mean a more rapid rise in gas futures should sentiment change. As always, I'll be here keeping an eye on it all.