Here's what I predicted Wednesday in The front advances in the gas price war.
Yesterday, the corner station displayed more caution, raising its price to $3.79, while the corner station still held firm at $3.54. Today, all stations moved. The corner station dropped its price to $3.69, while the three stations down the block raised theirs to $3.60. I expect the corner station to continue its swift but orderly retreat over the next two days and join the rest of the neighborhood outlets at $3.60.The very next day, which is now yesterday, the corner station did exactly as I foretold, matching all the rest of the stations in the neighborhood at $3.60, which is still where it is today.
How confident am I in the next prediction?
While the corner station is likely to lower its price to match its nearest competitors, their price is not likely to go down more than a penny over the next seven to ten days. $3.59 is no longer a ceiling; it's a floor. I wouldn't be surprised if prices went up to between $3.64 and $3.69 by the end of next week.Very.
Gas Buddy shows the national average has continued its rise from $3.58 Wednesday to between $3.59 and $3.60 today. Detroit's average, on the other hand, has gone down slightly from $3.73 Tuesday and Wednesday to between $3.72 and $3.71 today. It's performing just as I thought it would earlier this week, when I wrote "Based on the usual seasonal pattern, which has held very well over the past two months, it should decline slightly before going up again." I'd say that the past two days price pattern is doing precisely that. As for the local stations, their price is still more than a dime below the metro area mean, and is therefore underpriced based on historical patterns. The metro average will have to drop below $3.70 to make them priced correctly. Until that happens, I expect the price to go up next week. If it does, then the neighborhood stations will remain where they are, going no lower than $3.59. The price won't drop below that floor, as Reuters reports U.S. crude nears 6-week high as consumer confidence supports.
U.S. crude oil rose to near a six-week high on Friday, steered by stronger gasoline demand and a positive consumer confidence report, but gains were capped by profit taking and a declining demand outlook.Oil and wholesale gasoline may not have kept all their gains, but they still went up.
The International Energy Agency lowered its global demand forecast for 2014 due to expectations that more Libyan crude will reach the market next week, pushing Brent prices lower.
U.S. crude moved in tandem with U.S. gasoline prices, which surged early in the session due to government data released mid-week that showed a substantial draw on stockpiles, signaling robust demand before the start of summer driving season.
U.S. oil rose by as much as $1.04 to a session high of $104.44, before giving back much of its gains to settle 34 cents higher at $103.74 a barrel. The May contract rose nearly 2-1/2 percent on average over last week.
U.S. gasoline RBOB rose by as much as 3.35 cents to a session high of $3.0381 per gallon, but gave up most gains to settle 0.65 cents higher at $3.0144 per gallon.
Brent crude settled 14 cents lower at $107.33 a barrel, but still ended the week 0.5 percent higher on average.