Tight US gasoline markets make more price increases likely: EIA

Washington (Platts)--17Mar2004

US gasoline markets will remain tight and crude oil prices high, putting increased pressure on gasoline prices to go higher this spring, the US Energy Information Administration said Wednesday. EIA indicated that current market force make it more likely than not that gasoline prices will increase in coming weeks, even though average regular-grade pump prices dropped 1.4 cts/gal over the past week ended Monday, snapping a five-week rally. EIA, in its This Week in Petroleum report, said supply has been unable to keep up with demand growth this year. As a result, US inventories have been drawn down much more than normal this year. January, which would typically be expected to see an increase of more than 12-mil bbl, actually saw total gasoline inventories fall by nearly 1-mil bbl, EIA said. "And there wasnt any significant improvement in February, relative to normal changes," the agency said. "As a result, there is little, if any, flexibility in the gasoline market to respond to any imbalances, be they nationally or in specific regions of the country."