Oil prices finished slightly above $70 a barrel Thursday as traders eyed the nuclear dispute between Iran and the West and after BP PLC officials said the company’s Prudhoe Bay output could be restored earlier than expected.
Well, it will be if we see it at the pump.
Concerns are still high, but economic pressures are forcing prices down.
On Wednesday, Department of Energy data showed U.S. crude-oil inventories rose 2.4 million barrels last week to 332.8 million barrels, or 6.2 percent above year-ago levels. Gasoline inventories rose 400,000 barrels to 206.2 million barrels, or 4.6 percent above last year’s levels.
So there's more oil on hand. That means it's sitting around not making anyone any money. Time to drop the price to get it sold. And more may be on the way.
BP officials believe a portion of the pipeline idled by corrosion concerns may be useable at least temporarily and that other sections can be bypassed. The flow of oil from Prudhoe Bay has been cut in half to 200,000 barrels a day as BP prepares to replace 16 miles of pipeline after discovering extensive internal corrosion that resulted in spills in March and early August.
Take all this news and add to that, the summer driving season is essentially over, and demand for fuel is dropping. That means there may be even more oil on hand. Economics being what it is, that should translate to good news at the pump.
I just saw evidence of that today. Here in the midwest, I saw pump prices as low as $2.35 this afternoon.
Hallelujah!
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