Comment on Wednesday’s prediction: I did buy gas for $2.09 in Allendale on Thursday, but then there was this surprising price hike to $2.29, making my prediction very WRONG.
Friday, February 2, 2007, 8:30 AM: Thursday’s price hike was surprising, but also a little weird. For instance, on Lake Michigan Drive, all the stations hiked to $2.29 *except* Speedway, which is still $2.17 this morning. There are examples elsewhere of the price hike not being universally embraced.
There is also some weirdness in the NYMEX quotes. I estimate the wholesale price of gas by using the current month and next month “RB” future price on NYMEX. On Tuesday, those prices were $1.52 (Feb contract) and $1.55 (Mar contract). The February contract expired on Wednesday, so it is time to look at the April contract, which I hadn’t been paying attention to. Today’s quotes are $1.52 (March) and $1.67 (April). In fact, all the contracts past March are up around $1.70. These numbers will change, of course, but I conclude that my estimate of wholesale prices has not been very good the past week or so.
With the March & April contracts, this morning’s 20-cent margin price is $2.32, and the 0-cent margin price is $2.11. Those are your price bounds for the next few days.