Gas Prices Make Big One Day Jump

If you don't have to buy gasoline today, wait until tomorrow, at least. Chances are, the price at the pump will be lower tomorrow than it is today.

The national average price of self-serve regular jumped more than two cents a gallon overnight, according to AAA's Fuel Gauge Survey. The price rose from $3.962 yesterday to $3.984, just a fraction under last Thursday's peak.

Retail gas prices rose in the face of a big sell-off in the gasoline futures market yesterday, which saw the price for June delivery gasoline plunge by 26 cents a gallon. Crude oil also suffered a sharp drop and today, is trading under $97 a barrel on the New York Mercantile Exchange.

Gasoline wholesalers have had a hard time following the market gyrations in recent weeks, but the safe bet has always been that prices would go higher, so in cases of uncertainty, wholesalers have tended to err on the high side.

Yesterday's big decline in the futures market may have caught many off guard, operating under the assumption that oil – and gasoline – would continue heading higher. In fact, a Goldman Sachs analysts last week predicted that very scenario.

Reality

But the numbers tell a different story. The latest report from the U.S. Energy Information Administration shows a rather large increase in both crude oil and gasoline stockpiles. That means the shortages the futures market has been betting on all year long aren't panning out. That report Wednesday sent traders running for the exits, causing the sell-off that was so fierce it caused a temporary halt to trading at one point.

Today there is more evidence to suggest that oil and gasoline are overpriced. The International Energy Agency (IEA) says high gasoline prices in the U.S. have caused consumers to cut consumption. Hence the increase in supplies.

Not only that, the IEA says the recent run-up in fuel prices is producing economic drag in a number of developed nations, meaning international demand might not be what traders were counting on. As a result, gasoline prices should be headed lower in the next few days.