Not only are traders losing their shorts, but local gas prices have plunged lower than the necklines at the Academy awards, dropping 7¢ a gallon since Thursday. In fact, with the exception of natural gas, the entire global petroleum complex is swan-diving toward lows not seen since June of 2010.
In my report from last Thursday, I noted seven reasons that gas prices would drop, both globally and locally, despite a ten to twenty year low in finished gasoline supplies for the West Coast. I also predicted that Brent Crude would likely bellyflop below $100, and that domestic oil would probably continue its nose-dive toward the $80 a barrel mark.
Today, Brent was trading below $99 a barrel and NYMEX crude was hovering just below $84.
Locally, the price collapse has been even more interesting. Our analyses of selected wholesale gas prices shows that on average, the wholesale prices charged to dealers flying the flags of major brands have dropped as much as 20¢ a gallon since last Monday, and that wholesale prices to unbranded independent dealers have dropped by more than 30¢ on average.
Even more amazing, is that the price of California's special, and very costly pollution-fighting gasoline is actually trading at parity on the local spot market NYMEX spot gasoline.
This means that for now, at least, that local gas will be dropping, and the more you delay, the less you'll pay. We aren't predicting 20 and 30¢ drops in the next few days because the markets are far too volatile, but it is entirely likely that the current trend of major downward moves of one to two cents a day will continue through Thursday.