U.S. gasoline prices rose for the first time in more than three and a half months Wednesday, snapping a near 100 day run of declines, amid an overnight leap in crude oil prices.
Data from the American Automobile Association indicates the national average pump price rose by less than a penny, to $3.681 per gallon, ending a streak of 98 consecutive days of declines, the longest downward stretch since 2005.
The move higher, while modest, could mitigate the anticipated pullback in domestic inflation over the coming months, particularly if its paired by a jump in heating oil and broader energy prices heading into the winter months.
“All streaks have to end at some point, and the national average for a gallon of gas has fallen $1.34 since its peak in mid-June,” said the AAA's Andrew Gross. “But there are big factors tugging on global oil prices—war, COVID, economic recession, and hurricane season. All this uncertainty could push oil prices higher, likely resulting in slightly higher pump prices.”
Gas prices are still some 27.8% lower than their early June peak of $5.104 per gallon, but are more than 15.4% higher than the same time last year.
Global crude prices were also on the rise Wednesday following some aggressive comments from Russian President Vladimir Putin, who accused western leaders of 'nuclear blackmail' and insisted that his country had the weaponry to reply to any perceived threats.
The escalated rhetoric, less than a week after reports suggested a pullback of Russian troops in southern Ukraine, rattled global markets, triggering a jump in the U.S. dollar and a surge higher in oil prices.
WTI futures for November delivery were marked $2.06 higher at $86 per barrel in overnight trading, while Brent contracts for the same month, the global pricing benchmark, rose $2.14 to $92.76 per barrel.
Data from the Energy Department, expected at 10:30 am Eastern time, will also provide some near-term clarity on domestic production and refining rates, as well as the levels of stockpiles held in the Strategic Petroleum Reserve, which hit the lowest since October of 1984 earlier this month.
That said, President Joe Biden's push to have domestic drillers increase their output, alongside his move to release 180 million barrels of crude from the SPR over a six month period, has been largely successful: U.S. refining capacity is running at 91.5%, according to Energy Department data, while drilling in the Gulf of Mexico and the Permian Basin is up more than 50% from last year to around 763 rigs and installations.
Another aspect of gasoline refining that could put downward pressure on prices is the change in blends that refiners produce over the winter months.
Summer blends, which evaporate more quickly in hot temperatures, are more expensive than the winter versions, which are designed to ignite more easily in cold temperatures.
"The last day that EPA requires summer gasoline is September 15, but most refiners start producing it again in late August and will draw down remaining summer supply," GasBuddy noted in a recent blogpost. "In addition, gasoline demand falls as temperatures begin to seasonally drop, leading gas prices to fall throughout the fall. Starting September 16, gas stations can again start filling up with the non-summer, or “winter” gasoline."
