After an unprecedented week of price hikes in the area, I am sad to report that more hike(s) are likely very soon. The stage is set for a price hike Monday to $1.99 (they’d go higher but I expect them to stay under $2 because of negative reaction), but the exact price may be different if the market drops a significant amount tonight (Sunday).
Unfortunately, it looks like the pending war between Israel and Hamas and OPEC are likely two of the main reasons that wholesale prices and oil prices have been rising. It looks like the market may be starting to turn back as we get closer to Spring.
Also, our spot pricing is much higher, in my opinion, due to our PADD levels being so low. We’re sitting at 46.8 million barrels of petroleum in storage. We haven’t seen a low like that since 2007.
That can probably be traced to Sunoco’s Toledo, OH refinery undergoing 6 weeks of maintenance that that recently started.
Those two factors are likely pushing MIDWEST prices higher than other places.
We’ll see how things go, but I would definitely fill up tonight or first thing in the morning as our trend has definitely turned into a upward pressure on prices rather than a downward pressure on prices.
Has our enjoyment of gas around $1.50 come to an end? It might have…
Ouch! What a terrible DOE report today, looks like large losses in gasoline stockpiles is becoming the norm. I’ll keep this short today so that I can enjoy just a little bit of vacation.
The DOE report as said was pretty rough for gasoline consumers. While oil inventories rose an amazing 9.6 million barrels, gasoline dropped by 2/3 that amount, falling under 200million barrels for the first time in recent memory. Midwest PADD lost a marginal 1 million barrels, which could have been worse, but look for wholesale prices to trade higher today. It may also lead to a price hike as the Grand Rapids area has nearly stalled on additional price drops.
Gasoline demand is also coming off its weakest numbers, demand seems to be making a comeback as prices fall under $3.
I’d look for a price hike to $3.89-$3.95 soon, but keep in mind how difficult price prediction seems to be this August.
If you can get gas under $3.80, I would strongly suggest you do so today.
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.
PS- Midwest PADD storage fell to 48mb this past week, look for the Chicago Premium to start hurting soon!
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!)
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!