The breather taken yesterday for the tide of rising prices ended quickly today when WTI settled 92¢ higher at $98.17 while Brent closed $1.01 higher at $112.12. Analysts understand that IEA and the rest of OPEC, especially the Saudis, can turn on the tap and replace the lost volumes of Libya. However, they are concerned that the unrest is not over and that something more will happen in Algeria and in Saudi Arabia despite the peace overtures being made by the respective governments to the restive populations.
Why are retail prices moving so quickly? News anchors and reporters have a problem understanding how the market works at the retail level and why crude futures going up today for a contract 30 or 45 or 60 days into the future will cause the price on the street to go up the very next day. Most refiners have to include a futures component in their pricing and that component has an immediate effect. In essence the future is today when we're talking how the price of crude affects the market. It is the only way that crude suppliers and refiners can keep up with market volatility.
Big upswing for the week: WTI +$12.07, $98.17; Brent +$9.54, $112.12; gasoline +18.32¢, $2.735; distillate +21.49¢, $2.928.
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