Crude oil and motor gasoline prices rose in February 2012 in a strikingly similar way to the price increases during February 2011. In February 2011, West Texas Intermediate (WTI) and Brent crude oil spot prices rose by almost $8 per barrel and $12 per barrel, respectively. This February, WTI and Brent prices increased by $9 per barrel and $10 per barrel. National average regular-grade gasoline retail prices rose by about $0.28 per gallon in February both this year and last year. These observations might lead some to recall the quip made Yogi Berra, the great New York Yankee catcher and wry wit to whom we owe thanks for the title of this week's commentary. However, a further examination shows that the similarity in pricing patterns may hide some significant differences in market dynamics between this year and last year.
On the surface, some of this year's price drivers resemble those seen last year. Geopolitical developments were a significant factor behind last year's February price rise, as the violent uprising in Libya shut down most of the country's oil production and removed a significant stream of high-quality crude supply from the market (see This Week In Petroleum - March 23, 2011, September 14, 2011, and December 7, 2011). Libyan supply is returning to the market, but supply disruptions in other parts of the Middle East and North Africa (MENA) were part of the price story last month -- this time in South Sudan, Yemen, and Syria. In the former Sudan, an unresolved dispute between Sudan and the newly independent South Sudan led the latter to shut in all of its production at the end of January. The U.S. Energy Information Administration (EIA) now projects that total production from Sudan and South Sudan will fall to an average 200 thousand barrels per day (bbl/d) in 2012 from about 430 thousand bbl/d last year, before recovering to 370 thousand bbl/d in 2013. In Yemen and Syria, civil conflict is also taking a toll on oil output. Yemen's production, already impaired by an ongoing outage to the Marib pipeline, was further curtailed in February by a strike at the country's largest oil field. EIA projects that Yemen's production will average 180 thousand bbl/d in 2012, and 200 thousand bbl/d in 2013, down from a pre-crisis level of around 260 thousand bbl/d. In Syria, damage to a major pipeline that feeds one of the country's two refineries has exacerbated production problems. EIA now expects Syria to produce 260 thousand bbl/d in 2012 and recover to 360 thousand bbl/d in 2013, versus 400 thousand bbl/d pre-crisis.