Gasoline and Oil Up, Future Price Direction is Murky

oil-tanker

The price at the pump is continuing to rise.  Numbers released on Wednesday show that the average price per gallon for regular gasoline in the U.S. rose 6.3 cents to $1.85 and the California average rose by 7.6 cents to $2.06. 

The price of crude also rose on Wednesday, climbing 6% to $43.55 a barrel for March delivery.  The LATimes notes that there is currently a conflict among oil experts regarding the future price direction for oil.

On the one hand, you have experts who think a healing economy and lack of new oil production will create a future price spike.  These are the traders who have seen the recent contango situation (where long-term prices are significantly higher than short-term) as an opportunity and have been buying up crude to store on supertankers, in the hopes that they will make a killing by reselling it later in the year.  (Although contango has pretty much ended now.)

And on the other hand, there are experts who fear this ever-increasing supply of oil will lead to an even greater glut in the market that will spark another round of steep price declines.

We have no idea which way oil is going, but surely this is evidence that the less America is dependent on this crazy commodity, the better.

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