The WTI crude oil price gained $1.50 a barrel yesterday with news about more rebel attacks on Shell facilities in Nigeria. There was also more speculation swirling around that OPEC will cut additional production at their March 15th meeting in Vienna, Austria. The up note in energy markets was contrary to the continued weakness in the equity markets, which were all dangerously close to forming fresh lows again yesterday.
Today the price for WTI crude oil shot up another $2 to over $44 a barrel after bearish Department of Energy inventory numbers were released. On the West Coast spot market gasoline and diesel prices jumped up another nickel per gallon today with increase in demand for gasoline and cold weather in the East driving both of those prices up.
The retail price of gasoline is leveling off in the U.S. but will be increasing in the next few weeks as refineries are switching to shipping the lower Reid Vapor Pressure summer gasoline to their terminals.
There is still a big disconnect between the price of crude oil as the refiners are now ruling the roost on what they will pay for their crude oil instead of the other way around. The equilibrium point will be reached when demand for gasoline starts equaling supply once again.
Various recent EIA and DOE reports are pointing to that already starting to happen. Speculators are no longer a factor in the oil markets and oil refiners are now operating strictly on a "What the market can pay" for their finished products rather than the other way around. That will allow them to get back to making a profit once again.
And just like the game "Rescue Boat", there are no winners in the oil trading business, only survivors!
Bob van der Valk is the Director of U.S. Branded License Program and Fuel-pricing Analyst with 4Refuel Inc. in Lynnwood, Washington and can be contacted at (971) 678-2975 or email tridemoil@aol.com
My viewpoints can be viewed at: http://www.4vqp.com/ourconsultants/thegasguy
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