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Economy in Brief

Petroleum Prices Strengthen On Potential Tightening Of Crude Supplies
by Tom Moeller March 24, 2009

The potential for OPEC restraint in crude oil production recently helped to lift prices for crude oil. For a barrel of West Texas Intermediate prices rose last week to $49.46, up roughly 50% from the December low of $32.37 per barrel. In futures trading yesterday, the May contract price for crude oil rose even further to $53.80 per barrel which was highest level since late November. Prices reached a high of $145.66 last July.

Regular gasoline prices the have followed the rise in crude despite the deepening worldwide recession. The price for regular gasoline rose last week to $1.96 per gallon. That also matched its highest level since last November. The latest was up 35 cents from the December low. Yesterday, the spot market price for regular gasoline also showed strength with a rise to $1.41 per gallon, up from $1.30 averaged last week and $1.20 during the week prior. These prices compare to those that were slightly below $1.00 at the end of last year. The figures are reported by the U.S. Department of Energy.

Weekly gasoline prices can be found in Haver's WEEKLY database. Daily prices are in the DAILY database.

Gasoline demand continued to suffer due to the effects of the U.S. recession although earlier declines in gasoline prices have given some lift to driving. The latest y/y change of -0.5% moderated from the 4.8% rate of decline seen last October. (Gasoline prices at the time were just off their peak.) 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 3.2% y/y. That negative comparison was led by a 9.9% decline in distillate demand and a 17.6% drop in residual fuel oil consumption. These numbers are available in Haver's OILWKLY database.

The price of natural gas continued downward with the coming end to the winter heating season. The decline to $3.83 per mmbtu (-58.0% y/y) was to the lowest level since 2002. The latest average price was down more than two-thirds from the high reached in early-July of $13.19/mmbtu.

American International Group is this morning's House testimony by Fed Chairman Ben S. Bernanke and it is available here.

The Role of the Federal Reserve in Preserving Financial and Monetary Stability Joint Statement by the Department of the Treasury and the Federal Reserve can be found here.

Weekly Prices 03/23/09 03/16/09 Y/Y 2008 2007 2006
Retail Regular Gasoline ($ per Gallon, Regular) 1.96 1.91 -39.8% 3.25 2.80 2.57
Light Sweet Crude Oil, WTI  ($ per bbl.) 49.46 45.68 -53.3% 100.16 72.25 66.12
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