A New Record
The national average for gasoline rose to a new record of $3.289 per gallon on Thursday according to AAA and the Oil Price Information Service. Gasoline futures actually dropped 4.93 cents to $2.72 per gallon after soaring +13 cents intraday.
The spike came after the Energy Department said gasoline supplies fell for the third straight week and demand rose for the first time since January. With current refinery utilization at 16-year lows at 82% this combination of factors caused a sharp increase in volume in contracts traded. Gasoline inventories are still at a 15-year high so we are far from a crisis but traders have never let logic get in the way of their bullish hopes.
There is concern that a sudden recovery in driving demand could push prices to $3.75-$4.00 as we near the peak summer driving season. The Energy Dept expects prices to peak at $3.50 in May but they are seldom right. Diesel at $4.023 per gallon remains only 2 cents away from its record high. Trucking companies report declining load volumes as fuel surcharges increase the cost of shipping. Railroads are the beneficiaries with many companies shifting to the railroads for freight in order to avoid the higher diesel prices.