Global| Jun 30 2009Energy Prices Are Volatile With Weak Demand & Short Supply Prospects
by:Tom Moeller
|in:Economy in Brief
Summary
For all of last week, the energy markets continued to discount weakness in the economic environment. The likelihood of an easing in demand lowered the weekly average retail price for a gallon of regular gasoline slipped to $2.64 per [...]
For all of last week, the energy markets continued to discount weakness in the economic environment. The likelihood of an easing in demand lowered the weekly average retail price for a gallon of regular gasoline slipped to $2.64 per gallon, down a nickel from the prior week. Yesterday, however, that decline stalled with heightened concerns regarding Mideast crude oil supplies. The Monday spot market price for a gallon of unleaded gasoline jumped roughly ten cents from last week's average to $1.90 per gallon. That jump did not, however, recover the price declines during prior weeks from the daily high of $2.04. The figures are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY & DAILY databases.
The energy market's volatility was notably evident in crude
oil prices. The price for a barrel of West Texas Intermediate crude oil
jumped to $71.49 yesterday which was the highest level since the first
week of the month. Prices averaged $68.76 per barrel last week. Against
this backdrop crude oil production rose 3.6% y/y during the latest four
weeks. In addition, supplies of crude oil continue plentiful as
evidenced by a 13.3% y/y rise in inventories of crude oil &
petroleum products. The figures on crude oil production and inventories
are available in Haver's OILWKLY database.
The gasoline demand figures continued to improve modestly but the comparisons still are negative. Year-to-year gasoline demand last week fell by 1.3%. That remained improved from the roughly 5.0% y/y decline of last fall. The change in demand is measured using the latest four weeks versus the same four weeks in 2008. Demand for all petroleum products was down 6.6% y/y in the latest week led by a 15.1% drop in distillate demand. These numbers also are available in Haver's OILWKLY database.
Finally, natural gas prices remained weak last week and fell to $3.86 per mmbtu (-70.0% y/y). Yesterday, natural gas prices held steady at $3.88 per mmbtu. Current prices are down by two-thirds from the high reached in early-July of $13.19/mmbtu.
Developing a Liquid Market for Inflation-Indexed Government Securities: Lessons from Earlier Experiences from the Federal Reserve Bank of St. Louis can be found here.
| Weekly Prices | 06/29/09 | 06/22/09 | Y/Y | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| Retail Regular Gasoline ($ per Gallon, Regular) | 2.64 | 2.69 | -35.5% | 3.25 | 2.80 | 2.57 |
| Light Sweet Crude Oil, WTI ($ per bbl.) | 68.76 | 70.61 | -49.9% | 100.16 | 72.25 | 66.12 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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