The US Energy Information Administration (EIA) has lowered crude oil prices in the short-term energy outlook (STEO) amid global market uncertainty. The EIA anticipates West Texas Intermediate (WTI) crude oil prices to average US$49/bbl in 2015, and US$54/bbl in 2016. The changed forecast was driven by concerns over the pace of economic growth in emerging markets, continuing supply growth, increases in global liquids inventories, and the possibility of increasing volumes of Iranian crude oil entering the market.
North Sea Brent has traded about US$5/bbl more than WTI, since January 2015, and as gasoline prices tend to follow Brent crude oil prices, the EIA expects retail gasoline prices to remain relatively low.
As crude oil prices change, prices of wholesale, and ultimately retail, gasoline adjust to reflect crude oil costs. On average, a US$1/bbl change in the price of crude oil will result in a change of US$0.024/gal in the price of wholesale and retail gasoline.
Ongoing refinery outages in California and strong gasoline demand in the US, however, have elevated gasoline prices in the last 2 months, despite decreasing crude oil prices. These outages have contributed to the higher gasoline prices as well as significant price vitality; regular gasoline prices increased to US$3.60/gal on 20 July 2015, and then fell to US$3.36/gal on 10 August 2015.
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