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Nebraska Department of Environment & Energy

Air, Land & Energy

Energy & Assistance Division

Gasoline and Diesel Prices Monitor

Nebraska Department of Environment and Energy

P.O. Box 98922|Lincoln, NE 68509

Phone (402) 471-2186|Toll Free (877) 253-2603

Gasoline and Diesel Prices Monitor

February 11, 2020

Crude Oil and Liquid Fuels

The Energy Information Administration (EIA) forecasts global petroleum and liquid fuels demand will average 100.3 million barrels per day in the first quarter of 2020. This demand level is 0.9 million barrels per day less than forecast in the January Short–Term Energy Outlook (STEO) and reflects both the effects of the coronavirus and warmer–than–normal January temperatures across much of the northern hemisphere.

The EIA's global petroleum and liquid fuels supply forecast assumes that the Organization of the Petroleum Exporting Countries (OPEC) will reduce crude oil production by 0.5 million barrels per day from March through May because of lower expected global oil demand in early 2020. This OPEC reduction is in addition to the cuts announced at the group's December 2019 meeting. In addition to these production cuts, EIA's lower forecast OPEC production reflects ongoing crude oil production outages in Libya during the first quarter.

Global liquid fuels inventories fell by roughly 0.1 million barrels per day in 2019, and EIA forecasts they will grow by 0.2 million barrels per day in 2020.

North Sea Brent crude oil spot prices averaged $64 per barrel in January 2020, down by $4 per barrel from December. Brent crude is expected to average $61 per barrel in 2020 and $68 per barrel in 2021.

The contango in the West Texas Intermediate (WTI) crude oil futures curve that developed in January is consistent with increases in U.S. crude oil and other liquids inventories, which—averaging 0.3 million barrels per day—increased at the fastest pace for the month of January since 2017. Also, trade press reports a significant decline in China's refinery intake, which is likely contributing to builds in crude oil inventories in Asia.

WTI crude oil spot prices are expected to average $56 per barrel in 2020 and $62 per barrel in 2021.

Gasoline and Diesel Prices

U.S. regular gasoline retail prices averaged $2.55 per gallon in January 2020, down one cent per gallon from December, 2019, and down 30 cents per gallon from the average in January of last year. EIA expects regular gasoline retail prices to average $2.53 per gallon in 2020 and $2.63 per gallon in 2021.

The peak price of $4.10 per gallon for gasoline in Nebraska was reached on July 15, 2008.

On-highway diesel fuel retail prices averaged $3.05 per gallon in January 2020, down one cent per gallon from December 2019, and up seven cents per gallon from the average in January of last year. According to EIA, the price is forecast to average $2.94 in 2020 and $3.03 in 2021.

The peak price of $4.77 per gallon for diesel in Nebraska was reached on July 17, 2008.

Because taxes and retail distribution costs are generally stable, movements in gasoline and diesel prices are driven primarily by changes in crude oil prices and wholesale margins. Crude oil prices that differ from the forecast would be reflected in the price of motor fuels. Each dollar per barrel of sustained change in crude oil prices relative to the forecast translates into approximately a 2.4 cent-per-gallon change in product prices.