Gas prices move up on Yemen fear premium

Two weeks ago, my report read Despite hype, oil and gas prices actually down this week.

Last week, all the stations in my old neighborhood sold regular at $2.29.  When I drove though my old neighborhood on an errand yesterday, one of the three stations down the street was closed, but the other two had lowered their prices to $2.27.  Meanwhile, the corner station was again camped out in No Man's Land at $2.49.  Based on the Detroit average of $2.35 at GasBuddy, the two outlets down the street are properly priced, while the corner station is 15-20 cents too high.  I expect it to go down, although not necessarily matching the rest at $2.27.  As I wrote last time, "if the commodity prices continue to go up or hold steady, they will pull retail prices up.  The only question is how long."

It took two weeks, but the corner station lowered its price to match the rest, while other stations in my old neighborhood raised their prices.  The path to that outcome was not a direct one, however.  Last week, when I skipped the gas price report so I could focus on Earth Day, the corner station had advanced ever farther into No Man's Land at $2.59, while the two open stations down the street were at $2.29.  I filled up Ruby to catch those prices while I could.  Yesterday, all four stations (yes, the one closed for construction had reopened) were selling regular for $2.39.

That's a reasonable price compared to the Detroit average of $2.44 from GasBuddy, although it could be a bit lower.  I'm not optimistic that prices will drop to $3.35, as OilPrice.Net shows both crude oil futures have gone up over the past two weeks.  Last time, I reported WTI at $53.29 and Brent at $58.43.  Yesterday's close for WTI was $57.06, while Brent was even higher at $64.64.  In addition, RBOB has risen 16 cents from $1.84 to $2.00, so I expect retail prices to rise instead.  I was skeptical of the narrative and reasoning in the Reuters article Oil rises on U.S. production dips, Middle East tensions, which forecast a run-up in oil futures based on the 100-day moving average even though prices were down.  The article also cited tensions in Yemen.  It looks like the reporter was right after all, although I'm more inclined to credit the fear premium than the technical indicators.

This may be the last report about gas prices using the stations in my old neighborhood until September.  After tomorrow, my commuting pattern will change and I will not be in their vicinity on a regular basis for the next four months.  I'll have to find some other set of stations to monitor.