Oil is below $36 a barrel and gasoline is higher than it has been in several months.
Makes perfect sense.
A Warning. Obama is in a nationalization mood and that may include oil at some point.
Don't do it.
Oil stockpiles were reported as much higher than expected 1-2 months ago, now they are lower - which means they are probably where they should be ... YET PRICES JUMP.
I am all for hanging oil company executives, gas station owners, and anyone involved in oil analysis / selling.
I AM confident (certain) that with 24 hours, oil would be less than $30 a barrel.
Oil prices tumble below $36 on bulging inventories
By DIRK LAMMERS, The Associated Press
Oil prices plummeted below $36 Wednesday on more evidence that U.S. storage facilities are bulging with unused crude.
Light, sweet crude for March delivery fell $1.99 to settle at $35.94 a barrel on the New York Mercantile Exchange.
Oil closed under $40 Monday for the first time in several weeks, and has closed lower every day since.
A weekly report from the Energy Information Administration showed that crude inventories jumped by 4.7 million barrels for the week ended Feb. 6. That easily surpassed the expectations of analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., who expected a boost of 3.4 million barrels.
Including last week's build up, crude inventories have increased by more than 30 million barrels in the past five weeks.
But gasoline futures soared on Nymex when the same report showed that U.S. inventories had declined by 2.6 million barrels, surprising trader who expected stockpiles to grow by 900,000 barrels.
"Demand went positive for the first time in recent memory, over a year ago, so that's given us a little bit of support," said Phil Flynn, an analyst at Alaron Trading Corp.
Retail gasoline prices have been a sore point for motorists in recent weeks, as prices at the pump rise even with oil in the doldrums.
Prices at the pump rose again Wednesday, and the EIA report spelled out some of the reasons why.
Refiners took in 214,000 fewer barrels of crude last week and gasoline production fell, the EIA reported.
The companies that own refineries are seeing the same dour headlines about job losses, and have slashed production as they try do match supply with demand.
That means there is less gas on the market, and consumers are seeing that at the pump.
The national retail average price for a gallon of regular gas rose 1.2 cents to $1.94 a gallon overnight, according to auto club AAA, the Oil Price Information Service and Wright Express.
That is about 15 cents a gallon above what it was a month ago, but about $2.17 below last July when prices peaked at $4.11 per gallon.
"Weak product demand is forcing these refiners to curtail activities, cutting runs, and that backs crude up into terminals, pipelines and floating storage, etc.," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "At the same time, it reduces gasoline production."
Many refiners shut down early this year for regular maintenance due to a growing consensus that millions of lost jobs will translate into less demand for gasoline.
A dismal forecast by the International Energy Agency on Wednesday further highlighted falling demand.
The Paris-based agency lowered its estimate for global oil demand in 2009 by 570,000 barrels to 84.7 million barrels per day because of the worsening economic downturn. The lowered forecast came after the International Monetary Fund predicted the world economy to grow by only 0.5 percent.
"Not only will the two-year contraction in oil demand be the first since the early 1980s, but 2009's decline will also be the largest since 1982," the IEA said.
The IEA forecast arrived one day after the U.S. Energy Information Administration predicted global oil consumption would decline by 1.2 million barrels a day this year.
Flynn said any optimism has to be tempered because of the continued build in crude inventories.
"People are going to realize that at some point, that oil is going to come to market," he said. "And when it does, it could dramatically pressure prices to the downside."
Addison Armstrong, director of market research at Tradition Energy, said the latest China customs data show net January crude imports that dropped to the lowest level in 13 months.
"The decreases are the result of the slowing economy, which has caused manufacturing plants to be closed and electricity generation to shrink," Armstrong wrote in a research note.
Oil had been trading near $40 for about two weeks, underpinned by OPEC production cuts. The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global crude supply, said earlier this week it has completed about 80 percent of 4.2 million barrels per day of output cuts announced since September.
In other Nymex trading, gasoline futures jumped 2.6 cents to settle at $1.2698 a gallon. Heating oil gained 1.5 cents to settle at $1.3164 a gallon, while natural gas for March delivery fell less than a penny to settle at $4.532 per 1,000 cubic feet.
In London, the March Brent contract fell 33 cents to settle at $44.28 on the ICE Futures exchange.