Fear on Fleet Fueling Prices
We all know that fleet fueling prices have gone higher but has it been for FEAR or supply and demand? Where will these diesel fuel prices go next is very hard to predict but in the eyes of this fleet fueling professional, I am going the opposite of most people and believe the fueling market is going lower.
Not knowing the certainty of what the future holds, we can look to our current and past trends for a glimpse of what may happen. Americans have been bullish on fuel since the middle of last year. There is always demand for fleet fuel but Americans are already slowing down on the amount of gas they are buying. In the past, experts have reported that when gas hits $4 a gallon, there is a psychological trigger for average Americans to change their buying habits. New statistics show that even at $3 a gallon people are driving less. So with current prices averaging about $3.50 a gallon, people are continuing to scale back their time behind the wheel. Less driving and fewer purchases at the pump leads to an increase in our domestic surplus. Keep in mind that the summer driving season is on its way and that means gas prices usually go up. I’ve also noticed that amount of money being traded in the futures markets is about half of what it was a couple of weeks ago. This tells me that a lot of buyers looking for a quick upswing have enjoyed their upswing and are now getting out.
“Fear tends to manifest itself much more quickly than greed, so volatile markets tend to be on the downside. In up markets, volatility tends to gradually decline.” – Philip Roth, American Novelist
The Middle East is the Middle East. Remember this is a part of the world that is never calm so a little calm is a good thing, they are not there yet but could… There has been a view amo aaam that crude oil market has $10 to $30 built into it based on fear and speculation. At this point I tend to agree. However, as always I continue to monitor and analyze the global and domestic industry factors and modify views as information changes. With what we have in front of us now, I see crude oil going under $100 by the middle of April and down to the mid $90’s by May. This will drive down diesel fuel prices and gas prices. By the middle of the summer when summer driving season is already over from the refining and distribution perspective, I think we could see prices drop into the upper $80’s a barrel. This could bring prices back to $3.30 a gallon for diesel fuel and $3 a gallon for gasoline in most parts of the country.
Let take another step forward of why fueling prices are going to go down. Inventory numbers released on Wednesday show a build in crude oil again. For more information please Visit: www.fuelmanagementsokolisgroup.com
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