It's been eleven days since I posted A boring ten days in the gas war plus a predicition for 2014. That means that the neighborhood gas price held steady at $3.19 for 21 days. Yesterday, the corner station charged into No Man's Land by raising what it was charging for regular to $3.35. The three stations down the street remained at $3.19. Normally, I'd predict that the corner station would have to retreat to where it started, but the indicators are that prices might actually start rising locally.
Gas Buddy shows that the national average has rose to $3.31 on New Year's Day and has been bouncing between $3.30 and $3.31 since. More importantly, the Detroit average shot up to $3.33 two days after Christmas, then glided down to $3.23 by January 8th. All this time, the neighborhood price held constant. However, the metro area mean shot back up to $3.30 yesterday, which means that the closest stations are more than a dime lower, which is much cheaper than they normally would be compared to the outlets around them. The Michigan price moved even higher during the same time from $3.26 to $3.38. Should the metro average hold, I'd expect a new level of $3.21 to $3.25 within a week for the neighborhood.
So what's causing this rise? Follow over the jump for the possibilities.
It's not a higher price for oil, as Oil-Price.Net displays the trend for WTI as down for the past two weeks and down to flat for the past week for Brent, which Reuters confirms although yesterday's trading had both oil futures up.
Oil settled higher on Friday, reversing two days of losses, as traders bought contracts to cover short positions ahead of the weekend and reports of production problems at a major U.K. oilfield stoked supply concerns.The price rise isn't restricted to Michigan. It's in Ohio, too, as Cincinnati's WCPO reports in Gas prices jump to $3.45 a gallon.
U.S. oil settled more than $1 per barrel higher, recouping $2 worth of losses from the previous two sessions, as weaker-than-expected U.S. jobs data raised expectations that the U.S. Federal Reserve may slow the winding down of its commodity-friendly stimulus program.
The Fed's massive bond-buying program has buoyed the economy as well as commodity and equity markets, and the central bank has been assessing how quickly to taper the program based on the momentum of U.S. economic growth.
Brent oil rose on reports of fresh production problems at the North Sea's Buzzard oilfield, two days after an outage at the largest UK oilfield. Buzzard is the largest of the fields that contribute to the Forties crude blend, the most important of the North Sea crudes underpinning the Brent crude benchmark.
Brent crude oil futures settled 86 cents higher at $107.25, ending the week with a slight gain. The contract extended gains by more than $1 to a high of $107.40 in post-settlement trade, just shy of the 200-day moving average of $107.42.
U.S. oil settled $1.06 per barrel higher at $92.72, after rising to a session high of $93.38. The contract, which has sunk from a $100 perch just before the end of last year, settled with a second weekly decline, as the market focuses on ballooning production.
John Matarese outlines why the prices jumped.As you can see, Matarese is blaming the weather for causing transportation problems, not higher oil prices. That, combined with the normal price increases that usually begin about this time, works for me.