The Oil Drum

55 comments on It's Time for Summer Gasoline

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Robert Rapier on April 16, 2008 - 12:59pm

The analysts at Platts are missing a major piece. It isn't that demand is necessarily increasing, but supply is definitely falling due to poor margins. And it has further to fall before things get interesting. If gasoline inventories continue to fall at this pace, then in May gasoline prices will start to make up some ground they lost when they failed to keep pace with oil prices.

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MadMaster on April 16, 2008 - 6:44pm

Total commercial petroleum inventories decreased by 8.0 million barrels last week, and are in the lower half of the average range for this time of year.

This is what's disturbing. There was a total ~8 million barrel drop last week too. This totals 16 million barrels in two weeks. I haven't heard anything that could cause this (other than companies not doing refining). But if refineries aren't doing their refining, shouldn't crude stocks build??

I'm expecting another drop next week because of multiple supply disruptions this week... (hence I voted for $127 before $103)

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neuroil on April 17, 2008 - 6:53am

Well ... crude stocks don't build because imports are way down. If this is because of voluntary restraint on buying this would mean in turn, if americans don't buy, the market elsewhere should be oversupplied, ie, stocks elsewhere should sore. Perhaps this is the case in China who have a project to build a SPR. It also seems, as the IEA said, that OECD stocks are less tight than last years. But still, the increasint price indicates that there are buyers at higher prices so even with america buying less, people are competing for what is produced.

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westexas on April 17, 2008 - 8:55am

My point is that refiners aren't going to let the inventory levels drop below minimum levels, and given what I believe is happening--importers bidding for declining net oil exports--refiners are caught between having to pay high prices for crude and the volume of refined product that consumers can and will buy at a price high enough to support buying expensive crude.

It's very much analogous to the problem that airlines have. Can they sell enough tickets at a high enough price to justify buying expensive jet fuel (and to replace their fleet as they retire older aircraft)?

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rainsong on April 20, 2008 - 11:45am

Demand for oil should be going down with the end of the heating oil season and before the summer vacation season. It is becoming expensive to build inventories. Most publically traded major oil companies are in debt. The costs to borrow money in order to store oil are high and affect the after tax income of a company.

I imagine the price of gasoline will be going up in some areas on June 1.