I know last month I told you both gas prices and diesel fuel prices were going to go lower. Stay with me on this, fleet fueling will go lower. Right now we have speculation in many different markets going wild. Have you seen the price of your morning coffee. It is at its highest level per pound in 34 years. Why? The same reason fuel prices are up. Speculators are using coffee as a hedge against inflation and other market insecurities.
I know gas prices nationally are 23 cents away from their all time high. I don’t want to disregard that because I bet almost 99% of us drive a gas engine vehicle and we are all feeling it as we pay more at the pump. I do want to focus more in on crude oil where gas and diesel fuel come from. Crude supplies again this past week had a build in inventory of over 2 million barrels in the U.S. Gas demand is down 2% from previous data points, no doubt that the price has something to do with that. Diesel fuel prices have been flat or at least as flat as $4.10 nationally can get you.
As a person that studies what the market is doing and seeing all of the noise are fuel, I just can’t believe this balloon will not pop on the speculators. See as I write this article all of the major oil companies just reported earning and of course they are high earning but so does everyone else in this stock market. I didn’t hear anyone cry that Apple made to much money. Oil companies as well as other businesses (Sokolis Group included) are in business to make money. Nobody, not big oil, not OPEC, not companies that make lip balm want higher oil prices. I should say at least not this high and not right now as the country continues to grow out of some difficult years.
It is the speculators that like take big risks for big reward or big loses. It is like a gambler saying “let it ride” on every spin of the wheel. Fundamentals will prevail here. What I mean is we have plenty of supply to meet current and future demand. Does the Middle East have unrest, yes and when hasn’t it. Is there fear of a difficult hurricane season, yes but haven’t we had those fears since 2005. Is the U.S. dollar trading at a 4 year low and by the way that is how crude oil is bought in U.S. dollars so other countries are able to buy more for less. Don’t blame the low U.S. dollar value on the President either. I don’t take sides when it comes to politics mostly because I think they are all blowhard government employees that are out to best serve them, their reelection and not what is really good for our country. Don’t let me get off topic or we will be talking about Donald Trump who I like but has had several companies file Chapter 11 and he thinks he has better answers then the other guys?
Here is what is going to happen to diesel fuel prices along with crude oil and gas cost, they are going down. When I write this article at the end of May we will be down at least 5% from where we are today and in June we will see another 5% dip, as long as no one takes over Saudi Arabia. Here is what it is like to be a speculator. A Speculator is like a kid at the playground that calls everyone names and bullies them around until someone stands up to them and smacks them down. The kid then runs away quickly. Once a hint in the oil market is going to get smacked, the speculator will pull money so fast out of the market our heads will spin. That day is coming. At least from where I sit right now. Every second something changes.