Crude Price Surge Ended – Wholesale Fuel Price Drop To Continue

Crude Price Surge Ended – Wholesale Fuel Price Drop To Continue

• May 13, 2011
• John Keller
• 0

There’s a great MSNBC news article out today discussing the role of the US Federal Government in helping fuel prices trend downward. The key takeaway for the Fuel Price Manager is that fuel prices are going to continue their downward trend of recent days. From a Fuel Price Management perspective, that means it’s a critical moment to invest in fuel pricing solutions that allow the continued monitoring of wholesale costs, and the competitor fuel price reaction. As cost drops, now is the time to increase retail fuel profits, while carefully managing the gradual fuel price decreases that the consumer expects.

News agencies are making it common public knowledge that retail fuel prices are quick to rise when wholesale costs increase, and slow to drop when wholesale costs decrease. But these agencies are setting customer expectations for retail fuel prices to drop over the coming months. That means people will be looking for price decreases, and will be quick to jump on them with a fill-up when they see a well-advertised price.

Here are highlights from the article:

1. Oil prices have peaked and appear to be coming down.
2. After flooding the financial system with cash for more than two years in an effort to stabilize financial markets and economy, the Fed is getting ready to turn off the taps. The anticipation is one reason oil prices are coming back down.
3. For all of the complex forces acting on the global oil market, the dollar has a powerful sway for the very simple reason that oil is priced in dollars. The dollar has begun showing signs of strength. Just as a weaker dollar helped send oil prices surging, a stronger dollar is reining them in.
4. The forces that drove prices higher seem to have reversed course. Global growth seems to be slowing. The dollar is strengthening. And the inflation threat from the Fed’s easy-money policies may be easing.
5. Until the outlook for oil prices becomes clearer, expect more daily price swings that will send even the most seasoned traders looking for cover.

The full article may be found here.

Comments are closed.