Retail gasoline prices are likely to creep higher as anti-government protests continue in Egypt and concerns remain about the stability of the Middle East.
The national average for a gallon of regular gasoline was $3.124 on Friday, according to AAA, Wright Express and the Oil Price Information Service. That's up 2.4 cents in the past week. Analysts expect prices to stay at $3 a gallon or higher — perhaps rising as much as 8 cents over the next two weeks — until the conflict in Egypt is resolved and tensions ease in neighboring countries.
The pump increases come at a time when U.S. gasoline inventories are at an 18-year high of 236.2 million barrels. Crude oil imports are up, too, averaging 9.1 million barrels a day in the past four weeks, which is 641,000 barrels a day more than the four-week period in 2009.
At the same time, motorists are staying off the roads, with demand up less than 1 percent in the past month, as winter storms hit many parts of the country.
"We will continue to have an amply supplied gasoline market all the way up through the spring and summer," energy analyst Jim Ritterbusch said. "But it's a market that remains subject to the vagaries of geopolitics."
Without the uncertainty about the Middle East region, it's likely retail gas prices would have fallen from 5 cents to 10 cents recently, PFGBest analyst Phil Flynn said.
Much of the concern that has kept oil prices higher lies in the stability of the region. Egypt controls the Suez Canal and a nearby pipeline that, combined, carry about 2 million barrels of day from the Middle East to customers in Europe and America.
That's a relatively small amount, compared with the 87 million barrels consumed worldwide every day, but traders fear the protest will spread to nearby OPEC-producing countries.
It was a volatile week for oil prices. Crude started just below $89 a barrel on Monday and shot up to almost $93 the same day. The rest of the week, prices stayed between $92 and $90 a barrel before dropping again on Friday, back to Monday's level.
Oil prices fell after the government reported a sharp drop in the January unemployment rate, which helped the dollar strengthen against other currencies. Commodities like oil are priced in dollars, so a stronger dollar makes oil less attractive to buyers with foreign currency.
Benchmark West Texas Intermediate crude for March delivery fell $1.62 to $88.92 per barrel on the New York Mercantile Exchange. In London, Brent crude lost $1.88 at $99.88 per barrel on the ICE Futures exchange.
In other Nymex trading for March contracts, heating oil fell 5 cents to $2.7138 per gallon and gasoline futures dropped 7 cents to $2.4339 per gallon. Natural gas lost a penny at $4.326 per 1,000 cubic feet.
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