Posted in: Forecasts,
by Patrick DeHaan on Dec 30, 2009 12:14 PM
I don't think this will be a difficult prediction to make, seeing how oil has risen to $78 and wholesale gasoline to $2.
The weekend will feature higher prices seemingly everywhere, if prices haven't risen in your area already. As I said in the previous post, much of the reason for the increase in prices is speculation that the cold weather will result in reduced inventories. The DOE report that was release today did indeed show a draw from stockpiles of just over a million barrels of crude, but more noteworthy to me is that overall oil demand is back over 19 million barrels per day, suggesting that prices will rise further as our appetite for fuels picks back up.
Unfortunately, $80 oil will be an all too easy target to hit as traders as the colder weather and improving economy tip the scale to the upside. While the U.S. dollar remains better than it was a month ago, it still isn't enough to hold oil prices down. (READ MORE!)
Distillate demand is also making a nice comeback, with demand picking up to 3.7 million barrels per day. A few months ago, it seemed like you couldn't get rid of all the excess supply. Distillate inventories are now just 10.9% higher than a year ago, while oil is flat, and gasoline is 2.2% higher.
I don't want to think about the future with all these factors lining up, but something that really does concern me is the extra refining capacity that has gone offline around the world as refiner margins tanked. As spring arrives, we'll need all the capacity we can get if things continue to look like this.
For now, let's just concentrate on the weekend- higher prices. Be sure to shop around with GasBuddy and save money!