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Gasoline Supplies Hit Lowest Level Since January

Wholesale prices bump up, pump prices may follow

By Mark Huffman
ConsumerAffairs.com

May 7, 2009

American motorists are driving a bit more and oil refineries have been turning out less fuel. As a result, U.S. stockpiles of gasoline fell by 167,000 barrels last week, according to the U.S. Energy Information Administration.

Supplies are now at their lowest level since January 2.

Gasoline prices on the wholesale market have moved up this week. Traders broke through a technical resistance barrier in Wednesday’s New York Mercantile session, pushing the price for June delivery to more than $1.62 a gallon.

With demand increasing and supplies falling, refineries were more active last week. After operating at just over 80 percent capacity for the last few months, refineries operated at more than 85 percent capacity last week.

Prices have also been rising at the pump in the last week, though no analyst predicts a return to last year’s runaway fuel prices, that peaked at over $4 a gallon in July 2008. Even though gasoline stockpiles are at a near low for the year, they are still 2.8 percent above the five year average for this time of year.

The nationwide average retail price of a gallon of self-serve regular is $2.11, according to AAA.

Signs that the economy may be improving faster than forecasts have encouraged the rally in gasoline futures, but some analysts think prices have risen faster than the market can really justify. Tom Knight, trading director at Truman Arnold Cos. in Texarkana, Texas told Bloomberg news he sees gasoline futures topping out at $1.85 a gallon in the current rally. That would likely translate into retail prices in the mid $2 range.

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