The small decline is what was left over after both refiners and retailers took big margin improvement, thanks to the usual lag time and their extreme low margins of early January. This does not mean that their [image-nocss] margins are fabulous. Refiners, especially, continue to languish due to the glut, even with this margin reprieve. Retail margin sits just momentarily at nearly 16 cents per gallon, close to double its width of two weeks ago. Both sectors will probably soon be forfeiting part of their gains.
The margin improvements were thanks to crude oil's approximate return to its level of a month ago. The near-month NYMEX WTI closed at $74.54 on January 22. There is a good case to be made that this price will drift down further to chase lower world demand. If it does, then retail price cuts, so far limited mostly to Midwest markets due to their faster response to U.S. Gulf crude and product spots, will spread nationally and accelerate the national retail price decline.
But if crude oil does not continue falling, or bobs back up a bit, then it would take either a bigger glut of gasoline or deeper shrinkage in gasoline demand to bring off a street price slide.
One possibility: crude oil prices don't rise or fall much, U.S. refiners idle even more than the current 21.6%, and even more motorists join the unemployed.
That combination would tend to maintain a sort of status quo, leaving retail prices relatively stable.
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