If you've taken a peek at wholesale gasoline futures as well as oil prices today, you'll see that prices are again heading higher. While I've been a believer that the economic slump hasn't finished, I think now more than ever I believe that things are moving forward, and thus, higher.
The National Bureau of Economic Research said that the slump the economy has been in that started in late 2007 concluded in the summer of 2009, when things bottomed out. Since then, the economy has moved forward, although at a snails pace, according to the group.
While my conventional wisdom says that we'll continue to see both positive and negative economic news over the next 6 months, the majority of it will be positive, and thus fuel prices higher.
Its not what I want to say- that oil prices will climb- as I have no position, short or long in oil, but its reality. The only thing about forecasting this is the timing. You see, we're going into a weak time of year for gasoline. While the economy improves, it usually brings higher prices. However, with demand getting weaker as the months grow colder, there will be a shaky ceiling on how high prices will go.
With China's growing appetite for oil and their need to fill their reserves, we can expect pressure from such activity. Demand in this country has indeed grown vs. last year, so there's a slight improvement there, adding upward pressure.
Having said that, GasBuddy will be releasing its shorter term (fall/early winter) gasoline price forecast later this week, so you'll want to stay tuned. I think a majority of the country will stay within 20-cents of where they are today, but prices will likely take a roller-coaster ride as traders seek a balancing ground between an improving economy and weak seasonal demand.
For today, it appears that the Chicago pipeline outage problem has completely resolved- except for the high retail prices that came along with it. Those high prices will continue to drift downward this week, and by weekend should be close to pre-pipeline closure prices. They'll be aided downward by Chicago spot prices which are now rivaling the Gulf Coast and New York for the cheapest in the nation. Regions outside Chicago should expect to see average prices climb this week.