(Oil & Gas 360) By Michael Smolinski – Our Predictions: Strait Of Hormuz Safely Open In 3-4 Weeks, We’ve Seen Retail Oil Price Highs, Much Higher Natural Gas Prices Will Follow April Lows.
Operation Epic Fury jumped retail oil prices to burdensome highs. Responses to Operation Epic Fury include the Weekly California No. 2 Diesel retail price jumping up to $7.567 per gallon two weeks ago (Figure 1, bold line) and the West Coast retail gasoline price to $5.396 (red line). The California diesel price high is $1.699 (29%) more than its Russian invasion high. The West Coast gasoline price high is 47.2 cents (8%) less than its $5.868 Russia invasion high. But $1.142 more than the U.S. average high (blue line). We credit policies for California and West Coast prices notably higher than the national averages, which are as high as they are because they include the West Coast.
We believe free markets working have the price highs of Epic Fury already reached. The big jump in oil prices determining who gets what is available, also has actions being taken. Countries drawing on Strategic Petroleum Reserves (SPR) inventory for supply is one example. U.S. SPR inventory declined 0.4 million barrels (mmb) three weeks ago, 1.7 two weeks ago and 4.1 last week to 409.2 (Figure 2, red line). SPR inventory will help replace crude oil no longer on its way from the Middle East. 2.5 mmb arrived here from Iraq and Saudi Arabia last week.
Oil supply throttled by Epic Fury jumped the spot price of heating oil to a $4.564 high March 20. The effort to finally end the Rulers-of-Iran’s war with the world quickly jumped New York Harbor spot price of No. 2 heating oil from $2.538 February 27th to its $4.564 high March 20 (Figure 3, red line). Today’s $3.833 per gallon closing futures contract price for New York Harbor Ultra Low Sulfur Distillate (ULSD) highlights market factors at work responding.
Yesterday, April 13th $3.833 per gallon closing futures price is helped by The Climate Changing to heating oil demand notably minimized. Notably cold air for the oil-heat part of the U.S. (Figure 4, red line) confirms that cold air hasn’t been eliminated. Especially by mankind using fossil fuel. However, since mid-February, warmer-than-normal (bold dot) temperatures have dominated. And Monday’s forecast for this week predicts only 26 oil-heat-weighted heating degree days will be experienced, equivalent to 61.3 °F, 13 degrees warmer than normal. What is normal for the end of May. We credit wind patterns, which are highly variable, for notable Change being common. Not the atmosphere’s carbon dioxide (CO2) content.
The New York Harbor spot price of regular gasoline jumping from $2 up to a $3.404 high March 30 reminds us of Russia invading Ukraine. Today’s regular gasoline closing futures price at $3.164 highlights Free Markets at work. The President’s Day Holiday February 16 had the New York Harbor spot price of regular gasoline down at $1.914 per gallon February 13 (Figure 5, red line). It was $2.076 February 27th and EPIC Fury launched the next day had it up to $2.769 a week later, $3.061 the week after that and $3.404 March 30. The jump reminds us of Russia invading Ukraine February 24, 2022, that jumped the price from $2.778 the 23rd to $3.595 March 8 (red dash). Today’s closing futures price 24 cents lower highlights supply/demand action progress.
By oilandgas360.com contributor Michael Smolinksi with Energy Directions
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