Dateline:  Terry, Montana

May 18, 2009

By:  Bob van der Valk

Don't look now, but the price of crude oil has been moving sharply higher over the last couple of weeks  That is now up 80 per cent over the last 3 months with the price of WTI crude oil increasing from $32 to $58 a barrel in just a short thee months.   The price of was up another 85 cents per barrel heading toward the $60 a barrel mark by the end of the day.

The June WTI crude oil price is up $1.60 to just under $58 a barrel this morning.  That is the highest price for crude oil since November 2008.  Most of the gains for crude oil and refined products are based on the DOE inventory statistics that were posted on Wednesday morning  They showed a lower than anticipated build for crude oil.  US crude oil stocks are still at their highest level in almost twenty years.  .
   

It is Cinco de Mayo in the US to celebrate Mexican heritage and pride.

By: Bob van der Valk

Petroleum traders have been keeping a weary eye on the news about the swine flu spreading to other parts of the world.

But by now they are used to having the least amount of bad news effect crude oil and in turn fuel prices. However, the current scare may be short lived as the real story behind the headlines is just beginning to develop.

This week’s DOE inventory statistics came in way over expectations for crude oil stocks rising almost 4 million barrels, twice the number predicted by industry analysts. For the time being, we've got plenty of crude oil on hand but will it continue to be enough for the future?

Finished product prices have remained flat and crude oil prices on the Nymex remained unchanged. In plain language, that means while crude oil prices meander up and down, gasoline and diesel prices are staying firm due to the expected increase in summer demand.

The May WTI crude oil price is up 84 cents to $50.82 a barrel. On the US West Coast the wholesale spot market price for gasoline and diesel went up 2 cents per gallon in concert with crude oil.

It's another day - same old story in the petroleum markets.

First - The US Federal Reserve announced a 1.5% month on month decline in industrial production and capacity yesterday. Crude oil prices reacted by going up this morning in reaction to that bad news

Samuel Johnson said: "Hell is paved with good intentions." It seems that this saying applies to unhappy independent service station owners in California today. They made it a through a down turn in the economy and barely survived a recession that is still taking its toll.

Then along comes the bad news in the form of inaction by the California Air Resources Board (CARB) on the letter from Governor Schwarzenegger requesting a delay or holiday in the implementation date set for the Enhanced Vapor Recovery Phase II regulation.

Quoting George Santayana: "Those who cannot remember the past are condemned to repeat it".

The amount of money being poured into commodities investments was $1.5 billion in the first quarter of 2009; almost triple that of the end of 2008. That amount of money was being invested significantly when oil dipped below $50. Investors in commodities have a great influence on crude oil prices as the lessons from the past years have taught us.

The van der Valk Gas and Diesel Price Advisory for 4-7-09

This is in deference to Mel Brooks for using the title of his play as a parody on what is happening in the world of petroleum products. But the springtime recovery of the US economy will be directly responsible for having the rest of the world's economies follow us as well.