Another lousy DOE report, Speedway hikes to $3.95

Edit: Speedway has just hiked to $3.95 in Michigan; while not totally shocking, this is something that might have been expected. The Gas Game gets quite difficult to predict at times like this!

Another disappointing report from the Dept. of Energy this week, we can look for gasoline to trade higher today.

Perhaps due to the Hurricane/Tropical Storms last week, the DOE reported refinery utilization at just 85.9%, with crude oil inventories falling 400,000 barrels (LOOP was closed [Louisiana Offshore Oil Platform] last week) which likely altered crude import numbers, but gasoline… OUCH! Gasoline inventories fell a massive 6.4 million barrels last week, putting us now in the lower part of the average range, and putting us almost exactly at the same amount of gasoline in inventories as this week in 2007.

In a month we’ve consumed 14.3 million barrels (600.6 million gallons) of gasoline more than were refined. Amazing! Look for that stat to perhaps spook traders as they see some bullish numbers coming in. I definitely expect gasoline to trade higher today, perhaps triggering a hike in the Grand Rapids area… more on that later today IF necessary.

Also, the SPR is STILL adding barrels to its massive storage?! Didn’t the Dept. of Energy state that with oil prices so high they were going to delay deliveries to the SPR in mid-to-late July? It hasn’t happened! This week the SPR sits at 707.2mb, last week 706.8mb and last year at 690.3mb. Just more empty promises from government to do something positive for the market.

Look for gasoline to pull oil higher as traders get some bullish news.

Patrick

PS- Midwest PADD storage fell to 48mb this past week, look for the Chicago Premium to start hurting soon!

5 Comments

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  1. I was looking at the market being up about 5 this morning and I was assuming that they would go to $3.959 AFTER that 5 cents goes into the rack prices. Now it looks like we will get 12+ cents and $3.959 won’t be high enough.

    I don’t really think that the SPR is hurting prices. The amount they put in there every year is a pretty small percentage of what we use. It’s not like their is a shortage of crude oil, I think people are still afraid to buy too much incase the price drops more. It is kind of foolish for them to pay higher prices for what they put into the SPR, but I still think it’s better to just get it full and let it sit (it’s almost there I think).

    Speaking of the SPR, I’m so sick of hearing stupid people in Washington talking about how they need to release crude out of the SPR to lower prices. I can’t remember what the maximum amount they can pump out per day is, but it isn’t even close to enough to make a dent in prices.

    The SPR is intended to be used in a national emergency, and $4 gas in an election year does not count as an emergency in my book. As far as I’m concerned, the majority of it should be saved to make sure the Military has enough fuel if we are ever in a major war and get cut off from the Middle East crude oil.

  2. Well, the SPR may be hurting prices, NOT by the small amount of oil they add, but the psychology on the market that oil could be getting to market instead…

    Most the time, the government isn’t paying for the crude going into the SPR, its royalty oil… instead of money, most the time the government makes oil companies pay for royalties as a % or so.

    Releasing oil isn’t really necessary for the OIL, but in my mind the psyche that follows it.

  3. drilling would have the same impact today – even if we don’t see the product for years.

  4. I still think the whole problem is the speculators in the market. They are the only ones that will react to things like releasing oil from the SPR or expanded drilling.

    If they are banned from the market, the silly things like those that MIGHT effect supply won’t matter. Instead the market will just respond to real supply issues like it should. Crude could easily get down to the $60-75 range.

    I didn’t see how the market ended yesterday, but last I saw it was up 8. But, for some reason we only had a 1 cent increase at the rack. So, we narrowed the gap with the market a bit and screwed up Ed’s new formula.

  5. ahh. but Chicago has more of an impact on Michigan. The nymex and Chicago sometimes do not jive. Also Branded gross price was up 4cents (BP/Sunoco).

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