Since Monday, the national average for a gallon of regular gasoline has decreased by four cents to $1.88. Low crude prices due to COVID-19 and lower demand for gas, as Americans continue to social distance, have helped to push pump prices lower. In its latest weekly report, the Energy Information Administration reported that gas demand plunged to 5.1 million b/d from the previous week’s rate of 6.7 million b/d. With Americans expected to remain at home in the weeks ahead, demand for gas is likely to continue declining alongside pump prices.
Additionally, domestic crude prices (West Texas Intermediate) decreased by $2.33 and settled at $22.76 on Thursday. Crude prices have remained volatile this week, following yesterday’s announcement of a tentative crude production reduction agreement between the Organization of the Petroleum Exporting Countries (OPEC) and other major crude oil producers, including Russia. Final details are still pending, but the collective effort is expected to cut global crude production by 10 million b/d for May and June 2020, while 8 million b/d could be cut for the remaining months in 2020. For 2021 and potentially 2022, OPEC and its partners may enact a cut of 6 million b/d. Market observers are skeptical of the cuts and are unsure if they are drastic enough to help prop up prices, which has prompted current crude prices to remain volatile. Moreover, the agreement still hinges on Mexico agreeing to the production cuts, adding more uncertainty and price volatility to the market. Crude prices will likely remain volatile until the market sees the final details of the historic agreement.
Largest Weekly Decreases
- Since last Friday, these 10 states have seen the largest declines in their averages: Alaska (-18 cents), Idaho (-17 cents), Wisconsin (-14 cents), Iowa (-12 cents), Wyoming (-12 cents), Arkansas (-10 cents), Minnesota (-10 cents), Michigan (-10 cents), Nevada (-9 cents) and Indiana (-9 cents).