Posted in: Commentary,
by Patrick DeHaan on Jan 22, 2010 12:42 PM
What a good week for consumers. Oil prices that began the week at $78.44 are currently at $74.97. Wholesale gasoline prices began the week at $2.06 are down to $1.97, a drop of nearly two cents per day.
The DOE report released was good, showed a build in gasoline inventories, demand that was low, and that there is plenty of spare capacity. The U.S. national average has turned the corner and begun to drop, and will continue to do so until next week. Prices in Canada can be expected to copy the slide I expect in the U.S. average, so if you can hold off on filling up for a few days, I would suggest doing that.
The U.S. dollar gained strength this week, starting off near $1.44 USD/EUR and currently trading at $1.4175 USD/EUR. The dollar has gained strength against other currencies as well, putting downward pressure on oil as prices become slightly more expensive in other areas of the world.
We also saw some poor earnings from large U.S. banks, putting a question into how quickly the U.S. economy will recover if the largest banks can't meet earnings expectations. This week has seen most news add to downward pressure on oil and gasoline prices, for which motorists should be happy about.
Also some news in the refining sector- Valero said it is in advanced negotiations to sell its Delaware oil refinery. This is good news not only for the folks who lost their jobs, but good news for consumers, as any many parts of government are trying to aid a sale. Keeping the refinery open will reduce concern about supply should the economy come roaring back.
Overall, I wish we had weeks that saw such positive news all around. Let's enjoy the falling gas prices this weekend!