(Oil & Gas 360) – Getting fuel in the form where and when it is needed has costs Profitable, for a while, supports our oil and natural gas outlook.
The 2024 retail oil price hike is the cost of arresting those who kill, maim and dominate. Operation Epic Fury The average retail price of US gasoline rose 63.8 cents per gallon, from $2.995 at the end of January to $3.633 last week (Figure 1, blue line). And the West Coast average price rose 86.3 cents, from $3.827 to $4.69 (red line).
A jump in retail gasoline prices reflects a jump in the price of crude oil needed to produce the fuel. West Texas Intermediate crude oil spot market prices rose seasonally, from around $55 per barrel over the Christmas/New Year’s holiday to around $65 per barrel prior to Operation Epic Fury (Figure 2, red line). The Strait of Hormuz was closed to all but Iranian crude on Monday at $94.65. $40 per barrel equals $1.68 per gallon.
The jump in WTI spot prices came despite another 3.8 mmb increase in US crude inventories last week. Seasonal increases in crude oil prices occur despite the increase in crude oil inventories at the beginning of the year (Figure 3, red line). Last week’s 3.8 million barrel (mmb) increase to 443.1 was 24 more than 419.1 as the year began. And that’s 7.9 mmb more than last year’s 435.2 (blue line).
Word that the IEA agreement was signed to release 400 mmb of strategic petroleum storage inventory from member countries, helped yesterday’s near-monthly futures contract price by $87.25 per barrel. Attack on America The US Strategic Petroleum Inventory (SPR) has increased from 540 mmb in early 2001 to 727 as 2010 began (Figure 4). It was used by Russia to prevent all supply disruptions in Ukraine, reducing it to 350. News that International Energy Agency (IEA) member countries will contribute to the release of 400 mmb sent the price for delivery ending in March 2026 down to $87.25 from $94.77 on Monday.
While yesterday $87.25 was the near-month closing futures price, today’s $95 reflects the reality of getting what you need, when you need it. Over the past four weeks, crude oil imports from Iraq and Saudi Arabia have averaged 0.818 million barrels per day (mmbd). SPR supplies used to deter Russian invasion of Ukraine started at around 0.400 per day, followed by a period of around 0.200 (Figure 5). The flow rate takes 9 months to reach the maximum rate of 1.200 mmbd. Oil prices reflect what someone is willing to pay for the cargo/freight they need, whoever has it is willing to pay for it.
