Posted in: Forecasts,
by Patrick DeHaan on Feb 12, 2010 01:17 PM
After a two day snow hiatus, the Department of Energy finally released its weekly report today, a report that continues to highlight poor demand and increasing inventories in the United States.
For the week ending February 5, oil inventories showed a healthy 2.4 million barrel increase, bringing the total amount to 331.4 million barrels. Gasoline inventories also posted a rise of 2.3 million barrels to 230.4 million barrels.
I was surprised to see that against lower wholesale gasoline prices, refiners increased production to 78.4% of capacity this week. Typically with margins been as poor as they have, we would have seen another decrease.
Refining operations in the Midwest added another 700,000 barrels of motor gasoline to inventories there, pushing wholesale costs in that region lower as supply remains well above healthy.
However, distillate inventories did drop 300,000 barrels, likely as the colder weather hit the Northeast and closures boosted demand for heating oil as people stayed inside at a higher rate.
After reviewing the report, I maintain the Midwest will have the cheapest gasoline in the nation this weekend, and $2.20-$2.25 will likely be seen in a few areas. The East and West Coast will likely see prices rise a few cents, while the Gulf region will see prices stable or fall.