02/03/2015 03:36 EST | Updated 04/05/2015 05:59 EDT

Gasoline prices heading up, analyst says

Gasoline prices are notoriously tricky to decipher. Is it driving season or not? Are refineries doing planned or unplanned maintenance? Is there a price war, or are gasoline retailers protecting their margins?

However, one thing has been clear over the past several weeks — gasoline prices have been falling throughout the country.

That is about to change, according to Roger McKnight, chief petroleum analyst with En-Pro International. McKnight says that at midnight tonight, gasoline prices will rise by three cents in Toronto and the rest of the country will follow suit.

'It's all based on what speculators are seeing as a constant increase in crude oil prices."

Drilling rig counts in North America are dropping. Yesterday the oil services company, Baker Hughes, released its weekly tally of rig counts. There were 1,223 oil rigs in operation, down by 94 in the past week and at the lowest level in three years. There's been a 35 per cent drop in rig activity in Canada over the past year

"Any drop in the number of rigs drilling for shale oil is an indication that they're in financial difficulty because of the low prices of crude," says McKnight. "This is exactly what OPEC wants to see."

Oil prices up nearly 20% in 5 days

The price of West Texas Intermediate, the North American benchmark, has risen by nearly 20 per cent over the past five days. Wholesale gasoline prices are also trading higher on the New York Mercantile Exchange.

However, that does not mean that gasoline is heading back to levels we saw in the late summer and early fall, says Michael Ervin, a longtime Calgary gasoline analyst with the Kent Group. He says that low prices might be behind us, but prices at the pump will remain moderate.

"I would say that it will be many months or even years before we see $1.20 or $1.30 a litre prices that we've seen in many parts of Canada," Ervin said.

Dan McTeague, a senior petroleum analyst at, says wholesale gasoline prices are in for a two- to three-cent overnight increase across the country, which should filter through to consumers shortly thereafter.

McTeague says he believes that's the result of speculation rather than any fundamentals in the oil industry. 

According to the price-tracking website, the national average for a litre of regular is already up 3.6 cents from a week ago at around 93 cents a litre.