By Brian L. Milne, Refined Fuels Editor, Telvent DTN
Wholesale gasoline values continue to find upside price support from refinery closures impacting the New York Harbor, with markets quickly popping higher on news of new unplanned downtime at other refineries even though there’s ample slack in the system while preliminary data from the Energy Information Administration (EIA) shows implied demand at 10-year lows.
Wholesale gasoline costs also moved higher in early February on climbing prices for Brent crude oil, the European price marker that is also used in pricing decisions for the US East Coast and other global markets, on a report showing exports from the North Sea to Asia reached an eight-year high from mid-December to late January. The news suggested a tightening European market.
View Telvent DTN’s Weekly and Historical Gasoline Price Index.
Oil demand in the fourth quarter 2011 was lower in both Europe and the United States year-on-year, while refinery outages should pressure crude prices because less crude is needed. Brent crude price gains are also coming despite sharply higher output from Libya following its civil war last year, with production from the Organization of the Petroleum Exporting Countries (OPEC) reaching a three-year high in January.
The reduced demand for crude in the Trans-Atlantic market instigated greater sales to Asia, as did a move by these countries to cut their oil imports from Iran. Western nations such as the U.S. are pressuring countries to cut their trade with Iran in an effort to dissuade Tehran from pursuing its nuclear ambitions.
The U.S. doesn’t allow Iranian oil imports, and the European Union has agreed to a July 1 embargo on crude supply from Iran. Asian countries, which are driving global oil demand growth, take receipt of the majority of Iran’s crude exports.
Also boosting wholesale gasoline costs in early February was an unexpected 0.2% decline in the U.S. unemployment rate in January to 8.3%, a three-year low, with the decline coming with 243,000 new jobs reported last month. November and December data were also revised up by 60,000 jobs.
The market was expecting the national jobless rate to remain unchanged or to even tick higher, with the report suggesting an ongoing recovery for the US economy that improved market sentiment. The better-than-anticipated jobs data lent support to gasoline prices since it suggests there will be more individuals commuting to and from work.
Wholesale gasoline costs were up in most major metropolitan markets in the U.S. during the first week of February, with many Midwest values getting an added boost from a malfunction at a regional refinery. This sets the stage for another increase in EIA’s U.S. average retail gasoline price, which was lasted reported up 5 cents at $3.439 gallon for the week-ended Jan. 30, a three-month high.
About the Author
Brian L. Milne is the Refined Fuels Editor for Telvent DTN—a leading business-to-business provider of real-time commodity information services. Milne has been focused on the energy industry for 16 years as an analyst, journalist and editor. He can be reached at email@example.com.