This Week In Petroleum |
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Released on February 27, 2008 Coming Attractions First, let’s turn back to spring 2007 to review the events leading up to the summer driving season. Data for the week ending February 23, 2007 showed gasoline inventories at 220.2 million barrels, 2.0% above the 5-year average. Gasoline demand was relatively strong, with the 4-week average level 1.3% higher than the same period in 2006 (based on weekly-to-weekly data), albeit relative to a 2006 comparable period that may have still reflected the aftermath of the devastating hurricanes in 2005. At this time last year, gasoline prices were about 75 cents lower than they are now. However, during 12 consecutive weeks from February to April, total gasoline inventories were drawn down by more than 34 million barrels, the largest such decline over a 12-week period in EIA’s data history. These stockdraws began with the seasonal sell-off of winter grade gasoline, which at the end of the winter may be sold at a discount to move it out of primary storage to make room for summer grade gasoline. However, stocks then continued to fall as a large amount of refinery capacity went off-line for both planned maintenance and unexpected outages. This longer- and deeper-than-normal refinery turnaround season, as well as low import levels, pushed gasoline inventories from well above the average range to well below it. These tight supplies pushed the national average price for regular gasoline to a nominal high of 321.8 cents per gallon on May 21, 2007. The situation this year differs from that of 2007 in several key respects. While seasonal stockdraws are expected in the next few weeks, gasoline inventories currently stand at 232.6 million barrels, or about 12 million barrels higher than this time last year and almost 8% above the 5-year average. And as was discussed in last week’s This Week in Petroleum, it is expected that refinery outages this spring will not be as numerous or long-lasting as last year, while imports of gasoline remain around year-ago levels. Additionally, gasoline demand growth has softened in response to a struggling economy and gasoline prices averaging above $3 per gallon all fall and winter. In fact, the current 4-week average for gasoline demand is 1.1% lower than this time last year. While gasoline stocks and likely refinery availability appear to have improved relative to the year-ago situation, there is still, unfortunately, another key element to consider: crude oil prices. Crude oil prices are currently around $100 per barrel compared to prices around $60 per barrel for the same period last year. The $40 per barrel crude oil price difference is equivalent to 95 cents per gallon, which significantly exceeds the 75 cent gasoline price difference from the same period last year. This suggests that gasoline prices could rise still more if crude oil prices do not fall from current levels. Although EIA does expect that crude oil prices may gradually decrease over the course of 2008 while the global oil supply-demand balance loosens, significant uncertainty surrounds this forecast. However, taking both gasoline market conditions and crude oil prices into account, it is still likely that we will see gasoline prices peaking at a higher level this spring and summer than we did in 2007. Such an outcome would not be a very happy ending for American consumers, and consumers may decide to enjoy more of their movies from home. Residential Heating Fuel Prices See Further Increases The average residential propane price rose by 3.0 cents, attaining the mark of 258.0 cents per gallon, which was a new nominal all-time high price record. This was an increase of 55.5 cents compared to the 202.5 cents per gallon average for the same period last year. Wholesale propane prices skyrocketed up 29.9 cents, from 147.5 to 177.4 cents per gallon. This was an increase of 72.0 cents from the February 19, 2007 price of 105.4 cents per gallon. Highway Diesel at Highest Price in History Soaring to 355.2 cents per gallon, the U.S. average retail diesel price rose sharply to the highest point ever, topping the previous record by almost 11 cents. This was a jump of 15.6 cents from the previous week and 100.1 cents above the price a year ago. On a regional basis, aside from the Rocky Mountains, prices also reached all-time record levels. Prices on the East Coast rose the most of any of the five regions, surging up by 16.4 cents to 360.8 cents per gallon. This raised the price by 108.2 cents per gallon above the price last year. In the Midwest, the price was up by 16.0 cents to 352.5 cents per gallon, an increase of 100.2 cents from a year ago. The price in the Gulf Coast area increased by 14.3 cents to 351.0 cents per gallon which was 101.3 cents above the level a year ago. Once again, the price in the Rocky Mountains was the lowest of any region last week, moving up by 12.3 cents, to 347.3 cents per gallon, 90.5 cents above the price a year ago. On the West Coast, the average price increased by 15.5 cents to 360.9 cents per gallon, 81.9 cents above the price a year ago. In California, the average price shot up by 16.1 cents to 367.2 cents per gallon, 76.1 cents higher than last year. Cold Weather Lowers Propane Inventories Text from the previous editions of “This Week In Petroleum” is now accessible through a link at the top right-hand corner of this page. |
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