What did I forecast about gas prices in Retail prices drop despite OPEC production cut?
The corner station is still at $3.41, but it's only a matter of time before it drops its price, too.On Friday, that happened. That was an easy prediction. What about the next one?
The Wall Street Journal gives me a reason not to expect local prices at the pump to fall more this week, reporting Oil Strengthens on Report that OPEC Could Cut Output.Prices did not drop any more last week and as of Sunday night, all the neighborhood stations were still at $3.35.
I reinforced that successful prediction in the next one.
RBOB is now three cents higher than last week, when it was $2.5245 a gallon, while diesel is half a cent higher than last week's $2.7474 a gallon. None of this suggests a rapid drop soon, although I expect the seasonal price trend to resume in a week or two. My prediction of $3.29 by the end of the month is still possible.Again, there was no drop, so that part of the prediction came true. The jury is still out about the other part projecting a resumed drop in seasonal prices, but that specific price target seems much less likely now.
Yesterday morning the corner station shot its price up to $3.55. Meanwhile, the three stations down the street were still at $3.35. I'd seen this before and thought it would be another charge into No Man's Land by the corner station. Yesterday afternoon proved me wrong, as the rest of the neighborhood outlets followed it, raising their prices to $3.49. Prices might resume going down by next week, but 20 cents lower by the end of the month, only one week away, just doesn't look good any more. Just getting back down to $3.35 would be good news enough.
Also, the neighborhood price is now higher than this time last year, when all four stations were selling gas at $3.45. I was right not to post Professor Farnsworth.
Follow over the jump for the fundamentals.
This price rise is not reflected in GasBuddy, which shows that both the national and Detroit averages are still falling. The national average is now $3.33, five cents below the $3.38 of the last update. The Detroit average fell even more from $3.49 to $3.39, a full dime lower. According to these trends, the nearby stations are overpriced relative to the local retail price environment. They should have lowered their prices to $3.29, as I had predicted. That means I need to at the current wholesale price environment to explain what happened and what it portends for the near future.
I'll begin with Reuters, which reported yesterday Stocks fall on China slowdown concern; Brent ends below $97/bbl.
Concern about a potential economic slowdown in China pressured world stock indexes on Monday and helped pushed Brent crude oil below $97 a barrel.That's lower than the $99.05 a barrel for Brent and $94.88 a barrel for WTI I reported last week, so those aren't the cause. What about RBOB? Natural Gas Intelligence reported yesterday that "October RBOB gasoline fell 2 and a half cents to $2.5857/gal." That is higher than the $2.5588 a gallon it was selling for last week, but not high enough to explain a 14 cent price rise in one day. I might have to go to last Friday's trading for an answer, as Platts reported NYMEX RBOB closes up, leading oil complex mostly higher.
Brent crude for November delivery fell $1.42 to settle at $96.97 a barrel. The expiring U.S. October crude contract fell 89 cents to settle and go off the board at $91.52 a barrel, down for a fourth consecutive session.
NYMEX October RBOB settled up 5.04 cents at $2.6114/gal, as the oil complex turned mostly higher Friday on news of a widening US-led campaign against Islamic State jihadists in Iraq.That might have done it. If so, this price spike should be short-lived, as RBOB is already going down.
Speaking of going down, WTI bounced off the $90/barrel floor I mentioned last week in tonight's trading in Singapore. The latest from Reuters Africa mentioned it in Brent climbs above $97 after upbeat China PMI.
Brent for November delivery was up 48 cents at $97.45 a barrel by 0243 GMT, after falling by more than a dollar on Monday.Yes, but that bounce is still lower than yesterday's close. If this continues, the neighborhood price will drop, although maybe not to $3.29 by the 30th.
U.S. crude rose 50 cents to $91.37 a barrel, rebounding from a session low of $90.58 which was its weakest since Sept. 11.