55 comments on It's Time for Summer Gasoline
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55 comments on It's Time for Summer Gasoline
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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.
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)?
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.