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Economy in Brief

U.S. Petroleum Prices Move With Seasonal & Global Forces
by Tom Moeller May 11,2010

Recently there has been divergent movement in U.S. petroleum prices. Last week, pending seasonal demand raised the pump price of regular gasoline to another high. The cost for a gallon rose to $2.91, up more than three-quarters since December of 2008. But lately there's been a reversal of the strength. Yesterday the spot market price for a gallon of regular gasoline held twenty cents below the high averaged during the last week of April. The figures are reported by the U.S. Department of Energy and can be found in Haver's WEEKLY & DAILY databases.

Crude oil costs continued lower as concerns rose regarding the shape of the global financial market. The average price for a barrel of light sweet crude (WTI) fell to $80.22 versus $84.23 averaged during April. After declining through last week to a daily low of $75.11, the spot price rose slightly yesterday to $76.80 with progress addressing financial conditions in the euro zone economies.

Improved demand for gasoline has been part of the story driving prices higher. Demand for gasoline rose 1.6% last week versus one year ago but that compares with a 3.0% decline in early-February. The demand for residual fuel oil rose an easier 5.8% and distillate demand fell 3.0% y/y. That's improved, however, from a 12.3% decline during February. Inventories of crude oil and petroleum products improved through April but still were down slightly from one year ago.

U.S. natural gas prices continued to slide last week to an average $3.96 per mmbtu (+4.7% y/y). Prices reached a high of $6.50 early in January. Nevertheless, prices remained nearly double the September low.

The energy price data can be found in Haver's WEEKLY database while the daily figures are in DAILY. The gasoline demand figures are in OILWKLY.

Global Imbalances is the title of today's speech by Fed Vice Chairman Donald L. Kohn and it can be found here here.

Weekly Prices 05/10/10 05/03/10 04/25/10 Y/Y 2009 2008 2007
Retail Regular Gasoline ($ per Gallon, Regular) 2.91 2.90 2.85 29.7% 2.35 3.25 2.80
Light Sweet Crude Oil, WTI  ($ per bbl.) 80.22 84.24 83.04 43.2% 61.39 100.16 72.25
Natural Gas Price ($/mmbtu) 3.96 4.13 3.99 4.7% 3.95 8.88 6.97
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