April 2, 2009
OPEC's plan to raise oil prices above the $60 a barrel level appears to be running out of gas. World oil prices have plunged below $50 a barrel again after it has become apparent the U.S. consumer just isn't using as much energy as in the past.
In its weekly report, the U.S. Energy Information Administration reports U.S. stockpiles of crude oil have risen to their highest levels in 15 years. At the same time, stockpiles of gasoline also rose unexpectedly as consumers curbed demand more than projected.
For the week ending March 27, the U.S. had 359.4 million barrels of oil on hand. Thats an increase of nearly three million barrels since last week. Gasoline supplies rose to 216.8 million barrels, an increase of more than two million barrels.
"The tanks are brimming," Adam Sieminski, the chief energy economist for Deutsche Bank AG in Washington told Bloomberg News.
The good news for consumers was bad news for energy traders. Crude oil prices for May delivery fell more than four percent in Wednesdays trading, to below $48 a barrel. May gasoline futures fell more than five percent.
While lower energy prices have been a saving grace for the consumer during this deepening recession, oil producers have struggled to remain afloat with declining revenues. OPEC recently enacted production cuts, in hopes of shrinking supplies and boosting prices.
But U.S. consumers have refused to cooperate. Somehow, they're managing to get to work each day and carry on with their lives using less gasoline. Total daily fuel demand over the last month was down nearly five percent from this time last year.
But despite cutting demand, the U.S. consumer isn't being rewarded at the gas pump. The retail price of gasoline has risen more than six cents a gallon in the last week.
