Gas prices return to their lows for the summer

I decided to jump the gun on the promise I made in Local stations return to two month price support.

Despite the repeated bouncing off the floor, gas prices are still lower than at this time last year, when they were at $3.39.  I'd post Professor Farnsworth, except I'm waiting for all four stations to lower prices to $3.32 or below.  After that, it's the limbo kitty's turn.

The three stations down the street have all lowered their prices to $3.32.  The corner station is still at $3.35.  Even so, I'm posting Professor Farnsworth, as I expect that this time it will match the prices of the rest instead of balking or charging into No Man's Land as it has before.  The price resistance will be broken!

Also, the latest price drop means that prices are even lower than they were at this time last year, when they were selling for $3.36.  Prices will have to fall more by Friday, or they'll actually be higher than a year earlier, when the neighborhood outlets were all selling for $3.27.  Follow over the jump for indications that might not happen, at least not this week.

First, GasBuddy shows the national and metro averages bouncing off the floor.  The national average is up a fraction from $3.33.  The Detroit average has returned to $3.38 from $3.37.  Still, the neighborhood outlets could conceivably still reduce their price for regular to $3.29, but not any lower.

As for the wholesale environment, Reuters reported in the middle of the trading day that RBOB is still heading up.

RBOB gasoline was up 1.6 percent after the data showed stocks of the motor fuel fell 1.8 million barrels to their lowest level since November 2012.

In the short term, that will keep retail prices up.  On the other hand, crude oil looks to be headed down, as the most recent Reuters article on the topic had the headline Saudi cuts official crude oil prices in battle for market share.

Saudi Aramco sharply cut official oil prices for Asian customers in November, the state-run company said on Wednesday in the clearest sign yet the world's largest exporter is trying to compete for crude market share.

The move comes amid calls from some within the Organization of the Petroleum Exporting Countries (OPEC) for action to shore up prices, as international benchmark Brent crude oil has slumped to a two-year low.

But the price cuts on Wednesday indicate Saudi is likely to follow its long-stated policy of supplying enough oil to world markets, while at the same time quietly competing with countries like Iraq and Iran to be the top supplier to fast-growing economies like China.

The result of Saudi Arabia's reversal was Oil falls as bearish trend continues, Saudi lowers prices.

Wednesday's fall added to last quarter's losses that saw a 16 percent drop in Brent and a more than 13 percent drop in U.S. crude since June, the biggest quarterly rout in two years.

Brent crude settled 51 cents lower at $94.16 a barrel, its weakest settlement since June 2012, after earlier rising up to $96.23.

U.S. crude, which on Tuesday clocked its biggest one-day fall since November 2012, ended 43 cents lower at $90.73. Earlier in the day, U.S. crude rose to $92.96.

So much for that OPEC production cut.  Also, that $90 floor for WTI looks mighty rickety right now.  The next support level would be at $85 for WTI and $90 for Brent.  Let's see if prices drop that far.