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- 02 Feb
Wholesale prices up, oil prices down, demand up, retail fuel prices still down
Brian Milne, the Energy Editor at Schneider Electric presented some interesting statistics today, via Convenience Store Decisions. Here are the highlights:
- Wholesale spot market is up
- US Crude production growth is predicted to continue
- The traditional trend of the spring season is set to reverse the current 17 week string of declines in US retail gasoline prices
- Futures contracts are at a two year high pointing to expected gasoline price increases
- Amount of gasoline supplied to the primary market is higher than last year and five years ago (consumer demand is up)
- The highest two weekly averages of the year for gasoline supplied to the primary market were the last two weeks of the year
- Oil prices continue to drop on NYMEX
The seasonal trend of every spring time involves the transition from winter blends to summer blends, scheduled refinery shutdown due to scheduled maintenance, and anticipated increased volume usage as the weather improves and consumers drive more.
What does this mean from a fuel price management perspective?
We should see the increase in wholesale prices that we always see this time of year, even if oil prices continue to decline. That means strong retail fuel margins will be hard to come by. As NACS reported in their consumer survey today, consumers are willing to drive five miles out of their way to save five cents per gallon, and 65% of those surveyed said they had taken advantage of a discount such as a loyalty program.
We should also see a prolonged increase in retail fuel volumes as consumers are willing to drive more at current prices.
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