Thursday, July 17, 2014

Gas falls faster and farther than I expected

I was wrong in Gas prices finally lower year-over-year, although in two of the cases, I was wrong in exactly the way I'd like to be.
The next price drop arrived yesterday, when two of the three stations down the street lowered their price to $3.65.  Prices haven't been this low since the Thursday before Memorial Day.  They're also 14 cents below where they were this time last year.  Yes, time for Professor Farnsworth, even if the corner station and the third station down the street are still at $3.79.  By the end of the week, they'll join the rest.
First, the price for the corner station should have been $3.69, not $3.79.  Oops.  That's not the way I like being wrong.  Second, while the third station down the street did match the rest at $3.65, the corner station did not.  Yesterday morning, it dropped to $3.67, but by yesterday evening, it had lowered its price to $3.59, twenty cents below the price at this time last year.  It passed right by $3.65.  Now, I can still save my prediction if the three stations down the street are also at $3.59, so at least it will have matched them, but I haven't checked yet.

The last prediction I made may not be wrong, as I left myself an out.
As for what will happen next, I'm not sure.  On the one hand, GasBuddy shows the national average continuing to go down to $3.60 from $3.63 and the Detroit average has continued falling past $3.77 to $3.72.  Based on that, prices should be stable to down by next week.  On the other hand, Reuters reported that crude oil is bouncing off a bottom.
Oil prices ended slightly higher on Monday as traders weighed renewed violence in Libya against broader signs of a global market well-supplied with crude.

Brent crude gained 32 cents to settle at $106.98 A barrel. It had dropped to $106.21 earlier in the session, the lowest intraday price since April.
WTI is also flattening out, as another Reuters article reported "U.S. crude futures rose 8 cents to settle at $100.91 a barrel."  For the tie-breaker, I'm going to RBOB (wholesale gasoline stock).  Take it away Wall Street Journal!
Front-month August reformulated gasoline blendstock, or RBOB, rose 1.66 cents, or 0.57%, to $2.9251 a gallon. August diesel settled up 1.20 cents, or 0.42%, to $2.8729 a gallon.
I'll vote for steady prices not dropping ones next week as long as these conditions prevail.
The conditions I listed did not prevail, as The Wall Street Journal reports.
U.S. oil futures rebounded Wednesday from steep day-earlier losses as Chinese economic growth, Libyan unrest and a strong U.S. report on domestic oil inventories combined to deliver the strongest gain in more than a month.

Light sweet crude futures for August delivery rose $1.24, or 1.2%, to $101.20 a barrel on the New York Mercantile Exchange, their largest one-day jump since June 12. The gain pushed prices back above $100 a barrel, after they fell below that threshold on Tuesday for the first time since May 9, and arrested a month-long slide that knocked 6.5% off the market before Wednesday's rise.
The global Brent contract lost 17 cents, or 0.2%, to $105.85 a barrel, on the last day of trading for the expiring August contract.
Front-month August reformulated gasoline blendstock, or RBOB, lost 1.61 cents to $2.8824 a gallon, as analysts said the strong refinery runs likely panicked gasoline investors who fear a robust increase in supplies in future data releases. August diesel rose 0.23 cent to $2.8578 a gallon.
RBOB Gasoline lost four cents since the previous report.  Since that was the tiebreaker last time, it's the tiebreaker this time, so I can escape being wrong on prices not dropping.

As for what I expect next, the current conditions may be favorable for at least one more drop, possibly as early as next week, before they plateau or rise slightly.  According to GasBuddy, the national average is continuing to slide down, heading to $3.58, which means the corner station is at the national average.  The Detroit average is currently at $3.68 and declining.  This means that the neighborhood outlets are at their usual level of a dime below the metro average, so they won't drop any more until the Detroit mean price falls another five or more cents.  Based on the declines in Brent Crude and RBOB Gasoline, that's possible.

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