Another Dime Uptick at the Pumps
But all signals say down from here, Lundberg says
CAMARILLO, Calif. -- Retail gasoline prices rose 10.41 cents since September 23, to $2.9117 on average for self-serve regular, according to the most recent Lundberg Surveyof approximately 7,000 U.S. gas stations.
This after a 20-cent drop in the prior two-week period. The market was absorbing thirstily the supply comeback after Hurricane Katrina, when it ran into Rita, which idled much refining capacity. A price reversal, with pump prices tumbling, is all but certain now as all price indicators point [image-nocss] down.
Most recently, big rack price cuts and a peaking in dealer buying prices suggest that retail price reductions are imminent. Supporting this is some recent retail margin gains that may allow many retailers to pass through wholesale price cuts.
Refinery damage from both hurricanes is quickly being reversed, gasoline imports are heavy, crude oil prices are slipping and gasoline demand has taken a hit which effectively adds to supply. The contribution by demand to greater supply appears so far to be a moderate and preliminary 2.5% cut below September 2004 demand. Currently, the average self-serve regular price sits some 92 cents per gallon higher than one year ago. How long gasoline demand slumps will depend on price and upon a physical comeback in areas hardest hit by Katrina such as New Orleans, as well as how the economy overall performs.
With most of the Gulf refining capacity expected back on stream within two to four weeks, the question of gasoline supply and price can be expected to revert back to its source, crude oil supply and price. Barring crude supply tightness, or an extra-cold winter activating heating oil as a factor in the value of a barrel, the most likely direction for gasoline prices is downmaybe for several weeks.