I was right to expect a lower bar in The limbo dance pauses as the corner station jumps over the bar.
Looks like the traders are suffering from fear premium fatigue. As a result, RBOB is more than a dime cheaper than last week, when it was $2.8653 a gallon. If this continues, I might have to reset the price floor at $3.29, ten cents below the seasonal low a year ago. Should that happen, I will no longer be surprised.Since I wrote that, the corner station dropped its price three times, first from $3.54 to $3.49 on Saturday then to $3.39 on Monday. Tuesday, it finally matched where the three stations down the street had been at $3.35. I knew it would reduce its price. However, it still hasn't matched the rest of the outlets in the neighborhood, as they are now at $3.32. What did I write last week? "The three stations down the street could drop a few more cents to $3.33 or $3.32 early next week"--called it! Now I just have to wait for the corner station to match them.
So, is this as low as it will go for the summer? Probably not. Follow over the jump for why.
First, GasBuddy shows that both the national and Detroit averages have resumed their decline after a three day pause. The national average has coasted from $3.51 to $3.47, while the mean Detroit price fell off the ledge of $3.42 it had been sitting on for three days and is now down at $3.38 and looks like it could continue to go down. Based on that price, $3.29 is not out of the question.
Next, Reuters reported U.S. crude settles at 6-month low, Brent also languishing late yesterday.
Oil prices fell on Wednesday as abundant supplies in the United States drove the U.S. contract to its lowest close in six months, while Brent prices floundered near nine-month lows.Finally, RBOB is bouncing off a bottom, as Platts reports.
U.S. crude for September delivery lost 46 cents to settle at $96.92 a barrel, its weakest settlement since Feb. 3.
Brent crude oil lost 2 cents settle at $104.59 a barrel, its lowest close since Nov. 7.
Coming into Wednesday, the market had considered U.S. gasoline well-supplied. Front-month RBOB futures settled at $2.7155 per gallon (/gal) Tuesday, the lowest settle for an RBOB contract since February 6. But a sharp draw reported in American Petroleum Institute (API) data late Tuesday rallied RBOB overnight and into Wednesday trading.Then RBOB for September closed at $2.7439, according to CNBC. That's still slightly lower than it was on Friday. Just the same, the data suggest it won't go much lower any time soon. Because of that, $3.29 at the pump is not out of the question, but lower than that for the next price level would be a surprise to me.
At 1515 GMT, September RBOB had climbed back to $2.7620/gal, up 4.65 cents.