No post tomorrow due to holiday — market update
5 comments Thursday, 04-05-12 | Posted By Bill | Predictions
For those that watch The Spike Line or Today in Oil, tomorrow is Good Friday, and there will be no market trading in Chicago, so I will not be updating them. Have a good weekend and a Happy Easter!
Speaking of the market, You may have noticed that oil and the Chicago spot both fell this week. The Chicago Spot fell just in time, as we were ripe for a spike today if it hadn’t. We are down more than 25¢ since Monday, and oil is down almost two dollars after the one dollar rally up today.
That leaves us with a very big cushion going into this weekend. Hold off on gas because it should fall this weekend.
More good news.
The Chicago spot fell below $3 today. As of the 2:40 p.m. ET update, it was down 6.91¢ (-2.27%) to $2.9714. Using last week’s -5.79¢ rack adjustment, this drops the Michigan spike like to $3.616824. (Chicago finished the day down 7.88¢, -2.59%, to $2.9617)
New York gasoline futures are also down, 4.57¢ to $3.2948 in the case of May. Chicago is at a large discount to New York again: 32.34¢. June New York futures are $3.2336.
The national average is now $3.906. Ohio’s $3.749 state average is the 6th lowest in the nation. Akron’s $3.700 average is the 12th lowest for a metropolitan area in the nation. Chicago still has the second highest average in the nation, but is getting close to #3 Santa Barbara, California.
Michigan’s $3.878 average gives The Spike Line™ a 26.1176¢ margin.
What I would consider to be the lowest retail price in Grand Rapids is $3.779, available at a minimum of 11 locations. There is a Clark station reported at $3.759, but that may be a cash discount price (I’m inferring that based on the fact it is a Clark station and all the stations near it are $3.789 to $3.809, except one at $3.859). Membership clubs Costco and Sam’s Club are selling for $3.739. The Grand Rapids average is $3.842.
The Kalamazoo average is $3.878. The lowest price is $3.799 at 5 locations on Gull Rd. $3.789 is reported at the BP in Richland.
Patrick wrote this morning:
“Oil prices are down near $100 per barrel, and if things continue, oil may even drop under that magic triple digit level, which could possibly lead to further a sell-off as technical barriers are broken. Gasoline futures are also down to start the week, continuing last week’s sell off after the Energy Information Administration report that showed refineries boosting utilization earlier than expected amid a 9 million barrel rise in crude inventories.”
New York WTI May crude oil settled today at $102.46.
But here is the next reason to make the reason for a price spike:
http://money.cnn.com/2012/04/10/news/economy/refineries-gas-prices/index.htm?iid=HP_LN
Where do you get the Chicago spot price?
Michigan lower peninsula retail gas prices have fallen every day for the past two weeks, since the last reset on Tuesday, March 27 to $4.159. This is probably unprecedented for April, when prices are normally on the rise due to refinery shut downs for the conversion to cleaner burning summer fuel formulations, mandated by the U.S. EPA for some large cities, like Chicago.
Retail prices will continue to fall for a while, as the Chicago market for immediate delivery gasoline ( http://www.bloomberg.com/quote/CHOR87PC:IND ) fell another 9.21¢ (-3.11%) yesterday to $2.8696. This drops the Michigan spike line to $3.426616. 8.23¢ of the spike line drop is due to a larger (-14.02¢) rack adjustment than last week (-5.79¢).
New York May gasoline futures settled down 4.71¢ yesterday to $3.2496. New York May WTI crude oil futures settled down $1.44 yesterday to $101.02. Chicago is now at a 38¢ discount to New York.
The Michigan retail average is now $3.82. This gives The Spike Line™ a massive 39.3384¢ margin. If the wholesale price were to stay at its current level (it won’t), it would take until about Tuesday, April 24 before the next reset. My prediction of $4.259 on or before Friday, April 20 is in danger of not happening, which is of course good news.
The Michigan retail average is BELOW what it was a year ago at this time: $3.937.
Ohio now has the 4th lowest state retail average in the nation: $3.708. Akron ($3.666) and Dayton ($3.671) have the 9th and 10th lowest metropolitan area averages in the nation. Chicago ($4.336) has fallen to the 4th highest prices in the nation. Two stations in metropolitan Chicago (Citgos in Lynwood and Glenwood) are the lowest with $3.999.
The Grand Rapids average has fallen to $3.806. The lowest price NOT at a membership-only warehouse is $3.749 at the Circle K (777 44th St. SE) in Kentwood, a station previously discussed as often the low price leader in all of the Grand Rapids area.
The Kalamazoo average has fallen to $3.83. However, Kalamazoo has two stations reported below the lowest price in Grand Rapids:
* $3.709 at Citgo on E. Main St. at Nazareth Rd. in Kalamazoo Township
* $3.729 at Marathon on W. Main St. at Dartmouth St. in Kalamazoo Township
These stations are not typically low price leaders, so I guess this is maybe a case of them having just recently received a low priced fuel delivery. That particular Marathon (formerly Quick Stop) was prosecuted by then Michigan Attorney General Jennifer Granholm for price gouging after it ran low on fuel and raised its price to $3.999 on September 11, 2001. At the time, there were two other stations just across the street selling for something like $1.899, so this prosecutorial action was unnecessary. Those two other stations (Dairy Mart/Circle K and Clark/Super Duper) have since gone out of business, leaving that Marathon as the only gas station on W. Main St. between downtown Kalamazoo and Oshtemo Township, about a 3 mile stretch on the busiest surface road within Kalamazoo City limits (based on MDOT traffic counts, as this road is M-43).
It took a week, but the Chicago spot is finally having an up day. As of the 2:37 p.m. ET update, it is up 12.34¢ (+4.3%) to $2.993, more than erasing yesterday’s loss. This raises the Michigan spike line to $3.55742, still a healthy 25.558¢ below the Michigan average of $3.813. This moves my estimated date for the next reset up to Thursday, April 19.
New York May gasoline is up 3.85¢ to $3.2881. New York May WTI crude oil is up $1.60 to $102.62.
Apparently, the big energy news of the day is that natural gas has fallen below $2 per million BTUs (mmBTU). If you have the option of choosing your natural gas supplier (Michigan Consumers Energy customers do), make sure what you are paying is not grossly in excess of market prices. If you stuck with Consumers Energy as your provider, you are probably fine. However, if you choose an alternate provider, you might be locked in at a fixed rate that is significantly in excess of current market prices. For April, Consumers Energy is charging $5.2601 per thousand cubic feet (Mcf). I’ll let someone else figure out how to convert Mcf to mmBTU. Here are Consumers Energy natural gas prices for the past 18 months: http://www.consumersenergy.com/content.aspx?id=1254