I was right to proclaim "The price resistance will be broken" in Gas prices return to their lows for the summer. Yesterday, the three stations down the street hit the $3.29 I'd been expecting as the next step down from $3.32. The corner station resisted until this morning, when it also lowered its price from $3.35 to $3.29. However, it was already behind the rest of the neighborhood outlets, who dropped their price again to $3.25. By this evening, the corner station matched the rest at $3.25. That means I was both right and wrong when I wrote "I expect that this time it will match the prices of the rest instead of balking or charging into No Man's Land as it has before" and "the neighborhood outlets could conceivably still reduce their price for regular to $3.29, but not any lower"--right because they reduced their price to $3.29 and the corner station matched them, wrong because I didn't think they'd go lower this week. Still, it's the kind of wrong I enjoy being, as the lower price is good news. Also, it means that prices are still lower a year earlier, when the neighborhood outlets were all selling for $3.27.
As for how wrong I was to predict a price no lower than $3.29 this week, I'm only as good as my data. Speaking of which, GasBuddy shows that the Detroit average declined from $3.38 as of the last entry on the local gas price war to $3.35. Given that information, the neighborhood stations are right on target at a dime cheaper than the metro area. Also, the national average finally fell through the price support level of $3.33 it had been bouncing off for two weeks and is now at $3.32. Hey, the local prices are below the national average! More good news!
Follow over the jump for what Reuters and the Wall Street Journal had to say about crude oil and wholesale gasoline.
On the topic of breaking through floors, crude oil did that today, as Reuters reports in Oil shaves $1, retreats to bear territory on U.S. dollar spike.
Global crude oil prices extended a months-long rout into bear market territory on Friday, with Brent notching a new 27-month low as the dollar spiked following upbeat U.S. employment data and further signs of undiminished crude supply.WTI is below $90/barrel for the first time in a year and a half. Monday will either see a bounce to preserve the $90 price level or signs that the next support will be at $85. I'm not making a prediction which.
The rallying U.S. dollar has re-emerged as a key driver for commodity prices in recent months, making raw materials more costly for most importers and reviving a once-popular spread trade. It reached a more than four-year peak on Friday after a report showing the U.S. economy created more jobs than expected last month, putting unemployment at a six-year low.
Brent for November delivery fell by $1.11 to settle at $92.31, after earlier touching $91.48 a barrel, its lowest since June 2012. It lost 5.1 percent on the week, its steepest weekly loss since April 2013. It was the fourth week in five that the international benchmark has settled lower.
Brent has fallen by more than 20 percent since June, when it climbed near $116 following the incursion of Islamist militants into Iraq.
U.S. November crude fell by $1.27 to settle at $89.74 a barrel. It has lost around $2 this week, its steepest weekly fall in a month.
Also, RBOB is falling, too, as the Wall Street Journal reported in Oil Prices Slide After Jobs Data.
November reformulated gasoline blendstock, or RBOB, settled down 3.06 cents, or 1.3%, to $2.3785 a gallon, the lowest settlement since Jan. 25, 2011. Prices lost 4.4% this week.Oh my, that's much lower than the $2.6638 a gallon I reported in Gas returns to being lower year-over-year. WTI could go up another dollar, but between the lower price for RBOB and the usual seasonal decline, the retail price of gas is still headed lower. Stay tuned.
November diesel fell 2.17 cents, or 0.8%, to $2.6163 a gallon, the lowest settlement since June 28, 2012. Prices fell 3.2% this week.