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National Gas Price Average Holds Steady Amid Tensions with Iran

AURORA, Ill., (January 6, 2020) – The national gas price average held steady on the week at $2.58, but that could change depending on the movement of crude oil prices due to geopolitical concerns. Following airstrikes in Baghdad last Friday, which killed Iran's Major General Qassem Soleimani, crude oil prices increased, causing market speculation about what could happen to gas prices in the near-term.

It's typical to see crude oil prices push more expensive amid current events. What this increase means in terms of retail prices is yet be seen. It depends on how expensive crude oil prices go and the duration at which it sells at a higher price point.

Today's national average is $2.58, which is the same price as last Monday and last month, but 34-cents more expensive than the beginning of 2019.

Five Great Lakes and Central States saw gas prices decrease on the week including Indiana (-8 cents). All other states saw pump prices increase by a penny or hold steady. In the region, gas prices range from $2.20 to $2.66.

Gas prices in the region saw minimal movement thanks in part due to a substantial 1.4 million bbl build in gasoline stocks, jumping the regional total to 53.5 million bbl. Stocks have only been this high one other time since the end of March 2019, according to EIA data. With regional refinery utilization at 97%, stocks are expected to continue to build and pave the way for cheaper gas prices, but more expensive crude prices could change this forecast.



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Oil Market Dynamics

At the close of Friday's formal trading session on the NYMEX, WTI increased by $1.87 to settle at $63.05. Crude prices increased last week after the U.S. announced that it conducted a drone strike at an airport in Baghdad and killed Major General Qassem Soleimani – a top military leader in Iran. The incident has escalated tension in the region, raising the possibility that global crude supplies could be disrupted. As market concerns over geopolitical risk increase, crude prices have increased amid uncertainty over how long tensions may continue to rise in the region. Crude prices may rise further this week if tensions continues to mount.

In related news, EIA's weekly report revealed that total domestic crude inventories decreased by 11.5 million bbl last week, bringing the total to 429.9 million bbl. The current level is 11.5 million bbl lower than last year's level at this time.

Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.

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