Climb in Crude Costs Lift Gasoline

By Brian L. Milne, Refined Fuels Editor for Telvent DTN

 

Retail gasoline prices will edge higher in most metropolitan markets this week following a bump up in wholesale costs midway through September, with the advance sparked by an increase in crude oil prices. Crude oil prices rallied to the low $70s per barrel on a combination of optimism over the economy, a weakening US dollar, and a drawdown in domestic stockpiles of crude.

 

Federal Reserve Chairman Ben Bernanke said earlier this month that the recession in the United States was likely over, triggering a rally in the stock market and engendering a positive market sentiment overall. The link to gasoline prices is that an expanding economy uses more energy, with that view helping to drive crude higher.

 

The U.S. dollar also fell to a fresh low, making crude oil that trades internationally in the greenback less expensive for foreign purchasers and more costly for U.S. firms.

 

California is bucking the trend after prices surged in the Golden State due to unexpected downtime at a pair of refineries in the San Francisco area in August that crimped available supply. Product availability has since recovered, pressuring wholesale prices in California and along the West Coast.

 

View DTN’s Weekly and Historical Gas Prices.

 

The bump higher in retail gasoline prices elsewhere won’t last however, with national supply levels of the fuel climbing. Refiners will look to ratchet back production to limit an oversupply situation in the coming weeks, but summer’s peak demand is now over. More likely, retail gasoline prices will slip lower while crude will trade range-bound.

 

 

About the Author

Brian L. Milne is the Refined Fuels Editor for Telvent DTN-a leading business-to-business provider of real-time commodity information services. Milne has been focused on the energy industry for nearly 14 years as an analyst, journalist and editor. He can be reached at mailto:brian.milne@dtn.com

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