EDITED AN EARLIER POST:
Prices are $4.25 @ benchmark in Indiana! GET GAS!
While trees are coming down in Grand Rapids at this hour, I will unfortunately predict that our gas prices will rise. (I’m watching the TV… rain between 6-24″ deep in spots and people are willing to chance HYDRO-LOCKING their engines to get around town? Are people stupid?)
Let’s jump to the market: prices are rising today even with the DOE reporting gasoline stockpiles rose, however, oil inventories *DID* drop more than expected.
Look for $4.29 tomorrow, NOT because of July 4th, but because its like any other situation… prices climbed on the market, they will climb at the pump.
Fill’er up tonight! After a 7-cent drop yesterday on the market, prices have *already* shot right back up to what they were at the market open on Wednesday. $4.15 has been a popular re-hike amount lately, but I expect between $4.19-$4.25 tomorrow in Michigan depending on today’s final numbers. Since Midwest PADD dropped significantly this week, I think we might start having a little bit of a Chicago Premium to add, thus the $4.19-$4.25. Other states such as Indiana and Ohio may be a few cents less.
The DOE report yesterday was good for the most part, oil inventories posted a surprising gain, gasoline inventories rose if you exclude a drop in blending components, but Midwest PADD suffered and dropped 2 million barrels.
So, back to the re-hike discussion! A hike is likely, although not imminent, and may not happen yet tomorrow, BUT with prices under $4 happening, they are NOT likely to get ANY cheaper, so find a station under $4 and fill up tonight!
(I got gas for $3.93 yesterday!)
Today’s market slid over 13-cents per gallon on positive news coming out of China: they’re finally lowering subsidies on oil and fuel products.
The market immediately turned south after realizing that one of the biggest developing nations was now passing on higher prices to its consumers. This has the potential to turn the whole market around as traders finally realize that sustained oil and gasoline prices at these levels will kill off demand, even in developing countries that rely on it.
With the added news that the Saudi’s are increasing oil production, the market may correct… however, I doubt any correction to bring prices down more than $1 as oil stockpiles are tens of millions of barrels lower than last year, and oil inventories remain much below average.
We still may be poised for a mid-to-late summer decline, as long as Hurricane season stays in check.
For now, wait to fill up. Prices should moderate through the weekend, with potential of $3.95’s coming out within the next 5-7 days. We also may be poised for a jump in the market tomorrow. It’ll either be a small jump or another significant decline.
It’s been a while since I wrote here folks, but it seems prices have been “somewhat” steady around our region, and quite steady (what a surprise!!) in Grand Rapids.
If you read my previous post about the Summer Forecast, you’ll have a better idea where this post fits in the big picture.
Of course my writing was prompted by the Weekly DOE Report released today at 10:30am EDT.
Let me highlight some of the good news from that report for you that will help push prices (gasoline) lower:
- Refineries operated at 89.7% of capacity last week. This number is higher than previous weeks and is necessary to produce enough product for the Summer Driving Season
- Gasoline production and Distillate (Diesel) production rose compared to the last week, averaging 9.1 million barrels and 4.5 million barrels per day, respectively.
- Gasoline inventories rose by 2.9 million barrels last week, much higher than expected
- Distillate (Diesel) inventories rose by 2.3 million barrels last week, higher than expected
- Propane inventories increased by 2.3 million barrels last week, wow!
- Total inventories rose just 200,000 barrels last week, but most of that was due to a large drop (4.8mb) in oil inventories
- Total demand of petroleum products has averaged 20.4 million barrels per day, down 1.1% compared to last year.
- Gasoline demand as averaged 9.3 million barrels per day, down 1.4% compared to last year.
The only real downfall to this otherwise good report was the large draw-down in oil inventories (4.8 million barrels), but that’ll happen in Summer when refineries are trying hard.
Crude oil inventories are now over 40 million barrels below what they were a year ago (347.7mb compared to today’s 306.8mb) which definitely could use some improvement from OPEC.
The Midwest PADD’s storage rose last week from 48.6 million barrels to 49.3, which is good news, but could have been better. Perhaps our prices will fall a bit more than the rest of the nation.
Overall, a good report. Wholesale gasoline and diesel prices are really taking a beating in early morning trading after this great report came out. Gasoline at last check was down nearly 10-cents a gallon while Diesel was down nearly 8-cents per gallon. Crude was roughly $2 lower to $122.50.
We should see Grand Rapids prices slowly come down if the market holds negative. We could see as low as $3.85 in the next week, so don’t be too quick to fill up… PRICES WILL BE COMING DOWN (ugh, although we’re still talking just 15 cents south of $4… sad!) pending today’s closing numbers.
Seeing as how refiners were losing money for parts of this week refining oil into gasoline, utilization was low. It is rare, but refiners were losing some money last week as the cost of a barrel of oil was *more expensive* than the cost of their finished gasoline. They were losing cents on refining every gallon of gasoline.
Having said that, here are some numbers:
- Refinery utilization dropped to 82.2%- until the “crack spread” or earnings for each barrel of gasoline exceeds the cost of a barrel of crude, this will stay low. The only way that utilization will rise is if pump prices rise.
- Crude oil inventories remained unchanged from last week, even though much less crude was produced/imported than usual.
- Gasoline stockpiles fell 3.3 million barrels. This isn’t a surprise due to the issues I stated above about no profit from refining
- Midwest PADD storage fell to 56+ million barrels from 59+. This is a large drop and we may see any Chicago Discount begin to dry up.
This was a bad report, but local stations have already hiked to way over my previous target of 3.25-3.29. I believe we may see a rehike tomorrow to $3.45-$3.49, so keep an eye out between 9am-10am.
We’re back to usual here folks- pump prices will “march” higher to begin April!