Looking at the numbers, the averages here in the Speedway states are low compared to the Chicago spot’s break even price. This is due in part to the biggest climb in one day for wholesale in quite some time, 13 cents on the NYMEX, and 16 cents in the Chicago spot. Friday they went up again, and today is already up by 5 cents.
We may receive a late day spike today, and most definitely will see one by the usual time tomorrow morning. I see $2.70s being widespread, and some $2.80s being possible depending on what the markets end at today.
Comment on the July 6 prediction: As predicted, prices have been dropping steadily, down to $2.25 along Lake Michigan Drive, in fact. So, the prediction was CORRECT.
Sunday, July 19, 2009, 11:00 AM: Retail prices have fallen significantly this month, lagging but in line with the drops in the wholesale price as indicated by NYMEX and elsewhere. However, last week’s rally on Wall Street started to affect the energy markets late in the week, and NYMEX prices rose 13 cents a gallon. We are at the point where rising wholesale prices are colliding with dropping retail prices, which means a price hike is on its way, perhaps as soon as Monday. I predict a re-set to $2.49 a gallon, except for the handful of gas stations still at that price. Yes, I’m talking to you Speedway Ada! — Ed Aboufadel
It looks like speculators are getting the boot when it comes to gas and oil. As of this morning they continue to fall as more bearish fundamentals are being used to control the market. What this means for you is even lower prices in gasoline.
Currently the average price of gas is beginning to catch up to wholesale, which has dropped more than 30 cents since it’s high on June 30th. Margins are at about 10 cents, from a high of 25 cents last week as prices have dropped 20 cents since July 2nd.
If wholesale were to flatten out now, we could see our prices level out in the low $2.30s. But the forecast is for wholesale to drop even further. Widespread $2.20s could greet the end of the week, and the near future could give us some stations into the $2 teens.
It looks to me like powerful people are starting to pay serious attention to how much of the ups-and-downs in energy prices has been driven by a “casino-minded” attitude towards the future markets. Last week, PVM Oil Associates employee Steve Perkins lost $10 millon in a day playing the “electronic oil casino”. This week, the Commodities Futures Trading Commission is going after Goldman Sachs and others concerning alleged manipulation, or perhaps the word is abuse, of the futures markets. (There is a lot of other nonsense going on with Goldman Sachs, too.)
All this news shouldn’t come as a complete surprise to readers of The Gas Game. We’ve been talking about the effects of speculators and “investors” in the energy markets for quite a while.
Comment on my June 11 posting: Prices made it to $2.69 last week, and then lower this week, so my prediction was CORRECT.
Tuesday, June 23, 2009, 4:30PM: The stock market/energy market correlation continues. Stocks topped out recently on June 12, a day after the price of a barrel of oil did, while NYMEX waited until June 16. Since then, NYMEX has dropped 20 cents, and Chicago wholesale prices are down nearly 50 cents since June 4. That means the good news for us will continue, as the 0-cent margin price using Chicago wholesale prices is about $2.39. That means prices will continue to fall by several cents a day at least for the rest of the week. Hey, Ada and Lowell — get with the program!
— Ed Aboufadel