In the previous installment, I chronicled how the local station lost a gas war.
That was an unstable situation, which I expected to be resolved in favor of the lower price because most outlets in the area were selling for $3.29. Sure enough, the corner station lost the gas war and dropped regular to $3.27, matching its neighbors. That was yesterday. When I walked to the station just a few minutes ago, its sign was still displaying its relatively low price.The prices remained at that low level for a week, lulling me into a false sense of security. The day before yesterday, they shot up. The corner station jumped $0.30 to $3.59, while the three stations a few blocks down the street only rose to $3.49. Once again, this set up an unstable situation that I expected to be resolved by the corner station dropping its prices. Sure enough, that's already happening, as I paid $3.53 for regular this morning at the corner. Watch for all four stations to match at $3.49 very soon, if they haven't already.
As for what caused the rise, here's what Reuters reported Tuesday that Positive U.S. housing data pushes oil prices up.
U.S. crude oil rose more than 1 percent on Tuesday, exceeding gains in Brent crude, after strong U.S. housing market data bolstered confidence that economic growth and fuel demand were accelerating.That was Tuesday, which explained what I observed already. What about what could happen in the near future?
Financial markets rallied across the board when the S&P/Case Shiller composite index of 20 metropolitan areas showed single-family home prices rose in November for the 10th month in a row and posted its biggest year-on-year rise since August 2006.
Brent crude rose 88 cents to settle at $114.36 per barrel, having reached $114.49, its highest price since Oct. 16, 2012, while U.S. crude gained nearly 1.2 percent to settle at $97.57, off its session high of $97.82. Trading volume was heavy, with U.S. crude 33 percent above its 30-day moving average and Brent more than 20 percent above than its own 30-day moving average.
U.S. RBOB gasoline futures' traded up 1.3 percent, adding to gains of 2 percent on Monday, following news Hess Corp plans to close its 70,000-barrels-per-day Port Reading, New Jersey refinery.
U.S. crude and RBOB showed some technical signs of being overbought. The 14-day relative strength index (RSI) in both front-month contracts traded above 70, which is generally seen as a sign that an instrument is overbought and could be set for a turn lower.That didn't happen on Wednesday, as the headline read Oil rises as economic optimism overshadows weak US data.
Brent crude touched a three-month high on Wednesday after better-than-expected economic data out of Europe spurred optimism about the global economy before oil pared gains with surprisingly weak U.S. growth numbers.These increases came despite some economic news that should have pushed prices down.
Sentiment drew further support from declines in U.S. refined product stocks, although crude oil inventories rose sharply.
Brent crude futures settled 54 cents higher at $114.90 a barrel after hitting $115.24, their highest since Oct. 16. U.S. crude oil settled up 37 cents at $97.94.
U.S. RBOB gasoline futures broke the $3.00 a gallon mark for the first time since the end of September, settling up over 2 percent at $3.0387.
The U.S. economy unexpectedly contracted in the fourth quarter, suffering its first decline since the 2007-09 recession as businesses scaled back on restocking and government spending plunged.Screw the fundamentals. It looks like psychology is pushing prices up, as Kunstler is bemoaning in The Master Meme. I don't have time to mess with his latest missive of DOOM tonight. Instead, I'll just say that I expect prices to resume their rise once the latest skirmish in the local gas war is over.
U.S. crude oil inventories jumped by 5.95 million barrels in the week to Jan. 25, the U.S. government said. Analysts had forecast a 2.6-million-barrel crude build.
But the recent run of economic optimism overshadowed the inventory numbers and weak U.S. data.
"Overall, global macroeconomic trends such as the dollar and global equity indices hitting new 52-week highs have been pushing crude higher," said Chris Jarvis, president of Caprock Risk Management in Boston.