Tags: gasoline | prices | rise | consumers

Gas Rises as Refineries Close for Maintenance While Oil Supply Grows

By    |   Thursday, 26 February 2015 06:00 AM

Consumers had plenty to cheer about a month ago, when regular gasoline prices averaged $2.04 a gallon nationally, hitting five-year lows.

Now they have a reason to contain their enthusiasm, with the price at $2.33, up 14 percent in the past month. To be sure, that level still represents a 32 percent drop from $3.43 a year ago.

The price has rebounded as refineries have shut down for maintenance. "There’s a huge mountain of crude oil sitting out there … but it’s not getting to the refineries," says Aaron Task of Yahoo Finance.

That would suggest gas prices may fall back down after the maintenance is completed, although the approach of the summer driving season could serve to boost prices.

Meanwhile, the sluggish demand that has helped push oil prices to five and a half-year lows shows that all's not well with the global economy, says Stephen Schork, editor of The Schork Report newsletter.

"When you have such a sharp fall in commodity prices, that's because of economic demand. And I think that's a very worrisome telltale," he told CNBC.

U.S. crude prices have dropped 54 percent since late June to $49.52 a barrel.

"Oil prices are the canary in the coal mine," Schork said. "I don't think the global economy, especially in the United States, is all rainbows and unicorns right now."

The U.S. economy grew 2.4 percent last year, its fastest pace since 2010. Meanwhile, the eurozone economy expanded only 0.9 percent, and Japan's economy shrank in two quarters of 2014.

Oil could drop to $40 or lower before demand kicks in for the summer driving season, Schork said.

Oil has rebounded 15 percent from last month's low, but ace investor Jim Rogers agrees with Schork that the commodity may resume its decline soon.

"Whenever you have a major crude collapse like the current one, there has to be a rebound," he told The Economic Times of India. "However, normally the prices test the bottom before rebounding. I am not sure if we have seen the bottom yet."

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Consumers had plenty to cheer about a month ago, when regular gasoline prices averaged $2.04 a gallon nationally, hitting five-year lows. Now they have a reason to contain their enthusiasm with the price at $2.33, up 14 percent in the past month.
gasoline, prices, rise, consumers
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2015-00-26
Thursday, 26 February 2015 06:00 AM
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