Light sweet crude dropped briefly below the $48 mark to 47.95 before heading back up $48.20 this morning. Brent North Sea crude is up 12 cents in London to $48.40 a barrel and gasoline futures down slightly at just over a penny a gallon.
Supply and demand may finally be bellying up to the bar as OPEC has the pumps wide open, producing their highest levels of oil in 25 years. The U.S. Dept. of Energy in its weekly report on Wednesday aid U.S. inventories to continue to grow, going up 2.7 million barrels to 329.7 million barrels while speculation was that oil producers would have real problems meeting demands for the rest of the year. The IEA reports showed otherwise.
The IEA announced earlier this week that oil consumption was slowing down worldwide. U.S. consumption dropped by 90,000 to 250,000 bpd or a 1.7% drop. Chinese economic growth, while still going, didn’t climb nearly as much this year limiting their projections 470,000 bpd, this 7.4% is less than half of last years 16% from last year. Europe really bottomed going down 170,000 bpd, down 1.1% from last year.
Exports Gaining Ground
Also factoring in was the strengthening of the U.S dollar vs. other currencies because of an unexpected reduction in the trade deficit. American exports finally gained some ground against imports, particularly from China.
Gas inventories were up although only slight at 200,000 barrels to 213.7 million barrels. Both crude and gas are up substantially over a year ago with oil up 29.7 million barrels and gas up 11.2 million barrels.
Oil refineries in the U.S. continue to have problems as well. Conoco/Phillips continues to have problems, this time with power and repairs will take a couple of weeks. This adds on to the downtime they suffered last month for unforeseen maintenance problems. Sunoco also had a reformer problem and it’s caused a slowdown for them too.
Summer Driving Season
All this economic mumbo jumbo translates into one thing for the average American: prices at the pump. Right now, pump prices remain high. According to GasPriceWatch.com, the national average is $2.16 a gallon. The high is in Bridgeport, Ca. $3.19 and the low is $1.77 in Catlettsburg, Ky. While the prices is down some from the month of April, it still looms over consumers as Memorial Day weekend rolls around, which marks the beginning of the summer driving season. For the consumer, one can only hope prices will continue to drop.
John Stith is a staff writer for Murdok covering technology and business.
