For one thing crude (WTI near-month) closed $6.58 a barrel above the Feb. 20 price, averaging $3.78 higher over the period. If crude edges a little higher as the futures [image-nocss] market expects (world oil demand response to low price and oil production reductions support this), it will combine with modest gasoline demand growth to carry street prices up toward spring.
Even if retail gasoline's path mirrors that of last year, the late April price will represent a discount of well over $1 per gallon under late April 2008. This strong price incentive for demand growth is a positive for refiner, retailer and motorist wellbeing. The discount could be obliterated by either extreme crude price hikes or a far worse economy, but barring those, spring 2009 gasoline demand will have a healing influence on all parties.
So far this year, retail and refiner margins (both on regular grade) appear fairly healthy. Gasoline demand growth, should it stick, will give those margins needed muscle.
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