Oil Prices Move Lower

Because so far the OPEC production cut is all talk, no action. This story discusses the fact that OPEC’s March production was increased, and that thus far it doesn’t look like the April production has fallen.

For me this story also raises a question. The EIA weekly survey of US gasoline inventory moves oil and gasoline markets. Why do the markets pay it so much attention at this time of year? We always have this problem in March and early April now that we have seasonally different winter and summer fuel blends and have to deplete the inventory of the winter fuel. March has been the month of tricky inventory balances for a decade.

2 thoughts on “Oil Prices Move Lower”

  1. Lynne:
    Yesterday’s price behavior was just an insignificant daily variation. The price of oil is more likely to increase than to decrease for the next few months. There are several reasons, but the most important is that major oil producers have figured out that there is more profit to be made by higher prices than by increased production.
    Here is a link to a more worldly perspective than the Yahoo article that you referenced. http://www.atimes.com/atimes/Global_Economy/FD08Dj02.html

  2. Once they have shifted over to summer blends, refineries have to start building inventories for the summer. We don?t have enough refining capacity to cover the high demand summer months. We have to depend on inventories to cover the shortfall.

    If the inventories aren?t building fast enough it signals a shortage (and price spike) during the summer. Hence the worry.

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