With gas prices so low, our thirst for driving seems to be returning.
Demand for gasoline which has been way down for a while now, started to lift slightly, data revealed yesterday. Will it spur a huge run in the price of gas?
Probably not, but it’s possible:
WSJ: Demand for gasoline has nudged up above last year’s levels for the past couple of weeks, government data released Thursday show. Gas prices have been hovering under $2 a gallon since November, but now that they have been low for a while, consumers might be getting bolder about their gasoline use, analysts say.
In response, refiners who had dramatically curtailed production have begun ramping up gasoline output, drawing an additional 16,000 barrels of oil a day from storage last week, compared with the previous week. The nation’s oil stocks, which had been swelling to record levels, dropped last week for the first time in almost two months, driving crude-oil futures up $4.86, or 14%, to settle at $39.48 a barrel Thursday after two days of declines.
Oil prices have fallen over the past few months as demand slowed much faster than supply spigots could be closed off. Now this trend seems to be receding, providing some encouragement for oil-market bulls. Demand from industrialized countries is still falling, but more slowly, according to Barclays Capital, while a series of production cuts by the organisation of Petroleum Exporting Countries have tightened supplies.