OPEC decision expected to reverse June dip in fuel prices

Fuel prices fell again last week, continuing a June trend, but rising oil prices are now expected to undo the decline.

Gasoline prices fell nearly 5 cents a gallon last week in the Houston metro area, down to an average of $2.64 for a gallon of regular unleaded, while the national average dipped more than 5 cents to $2.83 a gallon. Fuel costs in San Antonio fell by 6 cents a gallon to $2.54.

However, crude oil prices spiked Friday and continued rising Monday morning after OPEC reached a compromise on modest oil production increases, bringing a degree of stability back into the global market.

That means fuel prices are expected to start rising again heading into the busy Fourth of July travel weekend, although not substantially.

“The worry is the rally may continue into this week as motorists prepare for the upcoming July Fourth weekend,” said Patrick DeHaan, head of petroleum analysis at GasBuddy, which tracks fuel pricing nationwide.

“The decision may lead to an abrupt end in recent gas price declines, or may slow it down,” DeHaan added. “I’m optimistic that we can avoid a $3 per gallon national average, but if gas prices were to mirror the gains in oil prices, a 5 percent gain would theoretically put us back at nearly $2.99 per gallon, not what you like to see any time, much less prior to the summer’s most popular holiday.”

The national average previously peaked in May at just about $3 a gallon, while the Houston average peaked just above $2.75 a gallon before falling through most of June.

Led by Saudi Arabia, the Organization of the Petroleum Exporting Countries decided Friday to raise production by nearly 700,000 barrels a day, less than two years after agreeing with Russia and others to cut production by 1.8 million barrels a day to boost prices. The U.S. benchmark for oil fell 50 cents Monday to settle at $68.08 a barrel.