Gasoline Falls 4% as Price Peak Seen
Gasoline prices took their biggest plunge on commodities markets in 2 1/2 months Monday amid mounting speculation that U.S. fuel supplies will be enough to meet drivers’ demand this summer.
But it will take time for the drop in market prices--assuming they stay down--to reach consumers. A government report showed that pump prices continued to edge higher last week, with average prices for self-serve regular climbing toward $2 a gallon in California.
Even so, the 4% slide Monday in market prices for gasoline appeared to reaffirm some analysts’ position that the spring surge in fuel prices is nearing its end. Prices of gasoline for near-term delivery on commodities markets have now dropped 11% from their high reached in April.
“Prices have peaked, for the most part,” Michael Fitzpatrick, a trader and broker at Fimat USA Inc. in New York, told Bloomberg News. “When people sell off like they have been, that signals to me that there is renewed confidence that supplies will be sufficient.”
Gasoline for June delivery fell 4.03 cents to $1.0098 a gallon on the New York Mercantile Exchange, the biggest one-day decline since Feb. 28 and lowest closing price since April 9. However, prices still remain 7% above their year-ago levels.
Prices fell Monday in part because a section of a Venezuelan refinery that had been shut down for 10 days is set to reopen today and will help maintain the increasing flow of gasoline shipments to the United States, traders said. Venezuela is the No. 2 exporter of gasoline to the U.S., after Canada.
The rise in such deliveries, combined with full production by U.S. oil refineries, is helping keep supplies adequate for motorists’ demand for gasoline, and should limit further price hikes at service stations, some analysts maintain. That’s assuming that there aren’t further disruptions at refineries.
It was a rash of unexpected refinery shutdowns last month that helped extend the spike in gasoline prices, but now some of those refineries are coming back on line.
“Refiners are making more gasoline and imports are coming in,” said Aaron Brady, an analyst at Energy Security Analysis Inc. in Wakefield, Mass. But he noted that “retailers are quicker to raise prices than cut them, so there will be a lag” at the pump.
Indeed, the average price for self-serve regular in California rose to $1.954 from $1.938 a gallon in the last week, the Energy Department’s Energy Information Administration said Monday in its weekly report. The average price in late March was $1.683 a gallon.
The national average price for self-serve regular edged up to $1.713 a gallon from $1.703, the agency said.
Meanwhile, crude oil for June delivery on the Nymex rose 16 cents to $28.71 a barrel. Oil prices have dropped about 3% from a year ago.
Refiners, taking advantage of the hefty profit margins available from gasoline sales, used 95.6% of their available capacity to make gasoline and other petroleum products in the week ended May 4, little changed from the previous week’s rate of 95.8%, the American Petroleum Institute said last week.
