Good earnings reports from several companies points to consumers willing to spend. Consumers willing to spend points towards increased gasoline demand as those consumers get out to spend and go on trips or vacations. The summer heat points to above average tropical activity. A storm has just developed into tropical depression #3. Tropical depression #3 will not only cause BP to shut spill operations, but will cause other rigs to evacuate, forcing a shut down of some production.
All of these situations points toward higher gasoline prices. As unlikely as it is, all of these events have started at around the same time, so oil prices can virtually only move higher. Suddenly traders are focusing on the upbeat earnings reports thinking the economy has healed overnight (which has not yet happened). Even though jobless numbers are up and the housing sector is down, traders are getting fresh air with good earnings from several big companies.
Not only that, but did I mention in addition to tropical depression #3, there is also another disturbance we're watching closer to Mexico? While this one looks to only impact Mexico, it certainly isn't helping to allay traders fears about the increased activity foretasted to take place this summer.
A few weeks ago, heck- even a few days ago- I wouldn't have expected gasoline prices to move much, but this could be the start of a rally for prices that may last into August. I'm glad I've been sticking with comments I said in May that late Summer could be a risk for travelers who may see gasoline prices rise as hurricane season enters the most active time of year.
With all these factors fueling deep emotions- bullish emotions- don't expect gasoline prices to fall for much longer. We're currently seeing a decent uptick in futures with oil just $1 from the all important $80 level that has seem impossible to reach the last few months. Gasoline futures are also posting large gains, up well over 6 cents per gallon.
Next week's prediction shouldn't be hard at this rate. I'll say we could see the U.S. average closing in on $2.77 by next week. Areas of the Midwest will also likely see a hike from Speedway either tomorrow or first thing next week.
So what can you do to fight higher prices? Report prices to us, shop around for the best price closest to you, and reduce trips you make.