Low gasoline prices expected to continue

With supplies of crude oil and gasoline exceeding demand, industry analysts expect low pump prices to continue through the middle of this year.

'The price of crude oil is at 12-year lows and counting,” said Harold Hommes, fuels analyst for the Iowa Department of Agriculture. 'There is very much an imbalance of supply and demand.”

U.S. crude prices rose 2 percent to $31.11 a barrel at midmorning Thursday, while benchmark Brent crude rose 1.5 percent to $30.75 a barrel.

Concern about a supply glut has helped drag down oil prices.

Data from the U.S. Energy Information Administration showed crude inventories rose 234,000 barrels last week, much less than expectations. The figure was overshadowed by reported build-ups of 8.4 million barrels in gasoline and over 6 million in distillates, which include diesel and heating oil.

The agency on Tuesday said crude oil prices are expected to remain low as supply continues to outpace demand in 2016 and more crude oil is placed into storage. EIA estimates that global oil inventories increased by 1.9 million barrels per day in 2015, marking the second consecutive year of inventory builds.

'Inventories are forecast to rise by an additional 0.7 million barrels per day this year, before the global oil market becomes relatively balanced in 2017,” EIA said in a news release.

'I think ultimately there are going to have to be production cuts,” Hommes said. 'Financially, the weakest producers are going to have to go first, whether that is North Dakota or somewhere else.

'The oil industry is very smart and ultimately this glut of oil is going to get brought under control - albeit later that many of us planned. I don't think it can be sustained for any length of time at these levels.”

Convenience stores and fuel retailers on Cedar Rapids' west side are selling gasoline for as low as $1.61 per gallon - one of the lowest prices in the state, according to GasBuddy.com. The average price of regular gasoline statewide is $1.96 per gallon and the lowest price is $1.58 per gallon in Clear Lake and Mason City.