Baby you can park my car. Yes it might even start, baby you can park my car and baby it is still cold outside. America hibernates and parks their cars as gas consumption hits a 13 month low. The drop in demand led to big surge in gasoline inventories according to two widely followed industry reports.
The first hint that America seemed to stay home for the holidays came from the MasterCard Spending pulse report that showed that gasoline purchases fell to 8.93 million barrels a day which was down 3.5% from the week before and the lowest level of gasoline demand since September 2009. That drop in demand probably explains why in another report by the American Petroleum Institute that showed gasoline inventories surged by 5.58 million barrels.
These reports suggest the obvious, bad weather and the holidays had an adverse impact on gasoline demand. Yet it may also show that demand may still be a bit price sensitive. Retail gas prices also surged last week as the national average pump price rose 4 cents last week to $2.62 a gallon. That according to Bloomberg is 63% higher than it was a year ago at this time.
Of course the increase in price should help inspire a bit more refinery activity. The February gasoline crack spread that indicates the profitability for a refiner to turn crude into gas, improved to $7.48 cents up 65 cents from the beginning of the week. For heating oil the crack spread tightened a bit but is trading at $10.49 cents. Improving margins hopefully will get refiners back in the game producing more product to meet what we hope will be an improving demand picture.....Read the entire article.
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