September 23, 2009

If there is a lag between economic activity and fuel demand, this must be it. Economists still say that the economy is improving but fuel demand deterioration continues. Inventories of crude and products are at unexpectedly high levels but demand numbers have been down for over a year and continue lower even with lower imports and refinery utilization. The $3 drop in crude and the 9 cent fall in gasoline as well as the 5.5 cents decline in distillate are the real harbingers of where the economy. It wasn't that long ago that refineries were in the 90%+ utilization and imports were rising as were prices. However, it should be noted that prices are still in that $65 - $75 band. Fundamentals are in charge now but will they be reasons for further decreases or will there be reasons for the analysts and traders to get prices to go higher?