Sunday, January 4, 2015

Gas falls to start 2015

I made several predictions to open The limbo bar drops to $1.95 plus 2014 in energy and environment.  Time to see how they panned out.
Last Friday, the news was $1.99 gas arrives in my neighborhood.  Today, the price at all four stations is $1.95.  Yesterday, the three stations down the street lowered regular to that price while the corner station was at $1.99.  Today, the corner station matched them.  I expect that's where the local price of gas will end the year.
That's exactly what happened.  The corner station remained at $1.95 through New Year's Day.

What about the second?
Gas Buddy supports my expectation, as the national average rose slightly from $2.27 yesterday to $2.28 today, a move mirrored by the Detroit average, which also rose slightly from $2.02 to $2.03 today.  I suppose the price could drop to $1.93 tomorrow, but that would be both counter to the trend and unexpected heading into a holiday.  Maybe Friday or Saturday, should the metro mean remain steady.
The price did drop on Friday and probably Saturday, too.  When I looked at the corner station on Friday, I could tell that its price for regular had gone down to a number ending in eight.  It looked like $1.88, but my wife was driving so I didn't get close enough to be sure.  On Saturday, I walked past the corner station and the price was $1.78.  Later, I drove past the three stations down the street and all of them were selling regular for $1.85.  These are not only the lowest prices I've seen for them since I moved here, but also the first time I recall prices continuing to drop after the new year.

As for which of the prices, $1.78 or $1.85, is more reasonable, it's the latter, as the Detroit average is $1.94 and holding steady for two days.  $1.85 is right on target, while $1.78 is well below what the market suggests it should be.  I would buy gas at the corner the next chance I get before the price rises.

The final one fared the worst.
Oil-Price.Net suggests that one or two price drops are possible, as both crude oil indexes (indices?) have broken through support.  WTI dropped below $55 while Brent fell through $60.  However, both may have hit bottom as both rose today, WTI $0.51 to $54.12 and Brent $0.02 to $57.90.
Those price rises ended up being dead cat bounces, as WTI closed on Friday at $52.69 and Brent ended trading for the week at $56.42.  Support for WTI is now $50 and the floor for Brent appears to be $55.  I really expect prices will not fall any lower than those prices.  Then again, I've been wrong before.  Stay tuned.

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