CLEVELAND –The average price of a gallon of gasoline in Greater Cleveland this Monday morning is just under $2.11 a gallon — up 9 cents over the week, and climbing.
But OPEC’s overnight announcement that its member nations, along with Russia and several smaller producers, had achieved about 93 percent of its agreed production cuts in January could soon increase crude oil prices. At least that’s what analysts have been predicting.
But oil prices were actually falling this morning, according to Market Watch, and had lost about $1 a barrel by late morning, with the price of the best U.S. grade slipping below $53 a barrel.
One reason could be the weekly oil and gas rig count, issued every Friday by oil field service company Baker Hughes, showed the number of rigs drilling new oil wells at 591 — up by 8 from the previous week and the highest since Oct. 30, 2015.
In other words, U.S. shale oil producers are throwing a monkey wrench into OPEC’s plans to raise global oil prices by reducing production. It’s not a surprise.
Some shale oil producers are still profitable when oil is priced at over $50 a barrel, either because they have learned how to drill lateral wells more quickly and efficiently or because of the region and rock formation in which they are drilling.
The U.S. Energy Information Administration is now forecasting that U.S. oil production will be increasing from 8.9 million barrels a day last year to about 9.5 million barrels a day in 2018.
The steady increase in U.S. drilling and production — even as U.S. demand is sluggish because of the weather — has crude oil and refined fuel prices in an uneasy balance.
Scheduled spring maintenance — both of oil fields and refineries — just as demand begins to pick up in the coming weeks is expected to push prices at the pumps higher.
“The era of falling gasoline prices will likely be coming to an end soon at a gas station near you,” said Patrick DeHaan, senior petroleum analyst for GasBuddy.com, in a note Monday morning.
“Not to say declines are completely done, but over the next few weeks we’ll likely see more times when stations are raising their prices then dropping them, thanks to gasoline demand that will soon begin recovering and crude oil imports that will soon reflect OPEC’s lower output.
“The national average typically rises 35-65 cents from its low price, usually in February, through Memorial Day, and there’s no reason to believe the same won’t happen this year, so buckle up,” he said.
Today’s average Ohio price, say both the AAA and GasBuddy, is $2.12, up 6 or 7 cents since last Monday. The lowest average prices in the state are in the Youngstown-Warren area, where prices are averaging $2.03 a gallon, AAA calculates.
Ohio’s average price of $2.12 puts the state among the lowest-priced in the nation — where average prices range from $2.03 a gallon to $2.15, according to the AAA’s ranking system.
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