The March WTI crude oil price is back down a to a little over $36 a barrel today. Apparently there is no support for crude oil prices after comments made, by former OPEC President and current Algerian oil minister Khelil , that OPEC will make further cuts in oil production if crude stays below $40 a barrel.
Bearish factors for crude oil prices include:
1. Crude oil inventories have risen for the 18th time in the last 20 weeks when the DOE publishes its weekly inventory statistics later this morning.
2. Concerns that global oil demand will weaken further after the drop in Japanese machinery orders for the third straight month in December.
3. That the French economy will slip into recession in the first quarter of this year for the first time in 16 years, and that French business confidence and manufacturing may weaken further in the coming months.
Bullish factors for crude oil prices include:
1. The drop in the dollar index to a 1-week low.
2. Hopes that U.S. energy demand will increase if the US economic stimulus package is successful in boosting the US economy.
3. Comments from OPEC Secretary-General Abdalla el-Badri that the cartel is prepared to cut production again when it next meets in March.
4. The American Petroleum Institute on Tuesday said that gasoline stocks dropped by nearly 3 million barrels for the week ending Feb. 6 and the DOE statistics this morning supported that number.
5. Treasury Secretary Geithner's laid out general plans yesterday to fix the nation's ailing financial sector and resuscitate the U.S. economy. It was in turn greeted very coldly by the investment community, who just saw more of the same in recent attempts by President Barack Obama to stabilize the country's banks.
It will be another balancing day between the doldrums crude oil prices have been in and the continuing rise in gasoline prices in spite of depressed demand levels.
On the West Coast gasoline prices are up 5 cents and diesel is up 2 cents per gallon this morning. No hopes are on the horizon to see any relief soon as the pump.
The rest of the country is also now starting to react to production cuts and unanticipated maintenance problems at U.S. refineries with the ever upward movement in gas prices now reaching the $2 per gallon mark.
Washington state motorists should consider themselves fortunate that they don't have to buy gasoline in California today. The price there is already at $2.239 and climbing steadily upwards.
Another spike in the wholesale pipeline price of 7 cents per gallon has not yet been factored into the pump price. As California has led the price of gas down when the bottom fell out of the market last year, they will be showing the lead in the up market as well.
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