A Reuters report has oil up over $112 today. This time, it's not just the weak dollar, which has seemed steady, but inventories have been reported at low levels prior to the summer season.
U.S. crude stockpiles fell 3.2 million barrels last week as imports declined, countering analyst expectations for a build, while gasoline and distillate inventories also tumbled, the U.S. Energy Information Administration reported.The jump in price is despite the prediction by the Energy Information Administration that demand will be down 36,000 barrels a day to 9.404 million bpd. This is the first time since 1991 the demand is likely to be lower.
The reason the EIA gave for lower demand is they are also predicting higher gas prices at $3.60 a gallon in June. With the price differential across the country, a $3.60 average means up over $4 for some parts of the country.
If the price of oil keeps jumping up, we'll see that average even sooner.
The EIA predicted an average of $103 a barrel in May and June.
Diesel users (truckers) have even more to worry about.
For May and June alone, EIA said the average price for U.S. oil was expected to be about $103 per barrel. Prices are expected, according to the EIA, to hit $3.73 a gallon. The peak will be in April, when it goes to $3.90 a gallon.
Photo from Garlyn at flickr.