To set the stage, we have all time record high unemployment. We have crude oil building every week. OPEC people mad that they are not making money. So in the end what could happen? Who knows?
As I watched CNBC today, I saw a friend of mine Joe Petrowski, CEO of Gulf Oil and Cumberland Farms say that he thinks the market could move into the $20 a barrel range with $1.00 gas prices. I like Joe but I don’t know if this market will get much below the high 20 dollar a barrel range. I predicted that it would and it would happen at the end of this week but I might be a few weeks early in my prediction.
As our 44th President of the United States of America is sworn in today, I can’t even imagine what must be going through Barack Obama head. This is only the 44 President in our entire history of the U.S. Think about it for just one moment. Think about the things that have happened in a quick snap shot: several wars and peace keeping missions, electricity, automobiles, stock exchanged was formed, a man to the moon, slavery, computers, indoor plumbing and numerous other events without enough paper to list them all. All under just 44 people who have lead our nation.
It was just a few weeks ago that we told you that the Gaza war would end before Barack Obama took office. Along those same line we believe Russia would come up with an agreement with the Ukraine. In our view we related these events to the events from 1981 when President Ronald Reagan took over the office from Jimmy Carter. Carter was viewed as weak, the economy was terrible and we had hostages in the Middle East.
The market contango is also extraordinarily wide, also provoking covering here,” referring to the March NYMEX contract’s $6 premium over February. Contango is a state of the market when further months out are higher than current moves. In short most believe that they price will rise as time goes on but will it?
The market is over flooded with crude oil as traders are buying crude and putting into storage in hopes that it will be worth more at a later date. Oil tankers are being leased at sea. Storage space for crude became very hard to find at a key delivery point when the January contract expired a few weeks ago as unwanted oil flooded the market. It’s a simple supply and demand issue. Still plenty of supply and not enough demand.
New week, new action, what are fuel prices going to do this week. The Sokolis Group still believes that there is room for prices to move lower, of course if we were as smart about the fuel market as we are about fuel management the company would be worth tens of millions of dollars. Here is why we believe prices will fall lower. This week oil prices fell as data showing a big rise in U.S. unemployment deepened the gloomy outlook for the world’s biggest oil consumer. U.S. employers slashed payrolls by 524,000 in December, driving the national unemployment rate to its highest level in almost 16 years, a government report showed, suggesting the year-long recession was deepening.
Just when everyone was starting to worry the fuel prices were headed higher we find out that we have a lot of inventory. Fuel prices plunged across the board Wednesday, giving up a week of gains with unexpectedly large U.S. crude reserves suggesting demand for energy has eroded even further.
The slide in gas and diesel fuel has slowed down and has actualy started to climb back up recent days amid indicators that the national average could jump to $2 a gallon or higher this spring.
There is no peace in the Middle East. Conflict between Israeli and Gaza continued for its 7th day. Meanwhile Russian gas monopoly Gazprom has cut off gas shipments to Ukraine since Thursday in a dispute over payments, and Ukraine warned that European customers could see serious natural gas disruptions in about two weeks.