Consumers should be in for a relatively cheap stretch when buying gasoline futures are continuing to remain low. This is due to the gas inventories rising by 5% during the summer, when they are normally expected to fall. This increase in inventories is due to higher production of oil within the United States as well as greater imports.
There has also been an increased stockpiling of oil due to the worry of hurricanes disrupting gulf oil production. As there were no serious storms this year, however there was little disruption in the oil supply. Coupled with the increased production at refineries and imports, gas inventories have risen to a twenty three year high. The excess could mean lower prices at the pump in the near future.
Oil Futures have not risen over $80 yet, despite predictions that they would rise that high over the summer. Now they are not expected to rise to that height until late fall. Gas prices should continue to fall slightly into the winter. The extra supply will also keep prices in a reasonable range. This leads me to wonder what the effect this will have on the energy companies. Will the lowered prices hurt their revenue, and could this situation hurt investors? It is compounded by an even lower demand than usual. Only time will tell what the outcome of this record-breaking height in inventories will bring, but it will certainly be an interesting situation to follow.
http://online.wsj.com/article/SB10001424052748704362404575480122525999544.html?mod=WSJ_Energy_leftHeadlines
Jason Ganz
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