12:16pm update: In a sign of how speculation is fueling things, wholesale prices have swung to the upside after trading lower following the release of the DOE Report. There isn't much news to push prices higher, but a large amount of speculative trading continues to propel oil prices higher.

Finally! The DOE report issued just minutes ago finally gave some breathing room for consumers who have seen gasoline prices spike in the last few days. The news of large increases in gasoline and oil inventories should be enough to send wholesale prices lower, but beware- retail prices still have catching up to do.

The DOE report today showed that crude oil inventories rose 1.3 million barrels while gasoline inventories rose 3.7 million barrels. The majority of the increase came as supplies in the Gulf grew over three million barrels. Crude oil supplies in Cushing, OK, the delivery point for NYMEX contracts, rose to a new record, but was partially offset by a drop west of the Rockies. (READ MORE!)

Refinery utilization again dipped below 80%, even factoring in refinery closures. It's becoming obvious that with these lower numbers, refiners are finding it difficult to make a reliable margin. We may see more refinery shut downs soon unless crack spreads (margin of turning oil into gasoline and distillate) improve.

The DOE reported that the amount of oil in the Strategic Petroleum Reserve sits at over 726 million barrels this week, no change from the previous week, but 25 million barrels higher than a year ago, a comfortable improvement.

The more cautious piece of the report continues to be higher demand. During much of the fall, overall oil demand was under 19 million barrels per day, sometimes as low as 18.2 million barrels per day. Demand has improved since then to an average 19.2 million barrels per day, an increase compared to last year. Gasoline demand is relatively flat while jet fuel demand is up. Distillate demand is also rebounding, off just 1% over last year, but sources tell me that real numbers may indicate diesel demand has yet to show a significant improvement.

What this means for your bottom line is this: retail gasoline prices still have catching up to do. Wholesale prices have skyrocketed over 25-cents in some areas, while retail prices have climbed just single digits. Today's DOE report may lead to losses in wholesale prices, which could translate into retail gasoline prices putting on the brakes in their rally in the next week or so. I expect the U.S. average to be closer to $2.75-$2.80 in the next week while Canada may come closer to 103c/L-107c/L.

The cheapest gasoline likely will be found in isolated areas of the Midwest and Northeast, as wholesale costs there are trading below that of other areas, such as the West Coast and Gulf States.