With many refineries shut down for routine maintenance and imports flowing in, crude stocks are making a comeback. The price has already fallen by more than 7 cents per gallon. Some analysts are predicting crude supplies could build to a significant surplus over last year. Gasoline inventories saw a substantial drop in the wake of four separate refinery incidents. As a result, production could soon slide below 8 million barrels per day. In order to meet the huge gasoline demand we see during the summer driving season, the industry needs to start building inventories. Areas most likely affected by a stockpile shortage will be those that require reformulated gasoline such as New York, Chicago, and other major cities. Meanwhile, California is preparing for price swings as the state moves to summer blends. California prices are likely to head higher during the switch as traders grapple with future supply/demand predictions. However, even with gasoline inventories down by 700,000 barrels, they are still modestly above last year, and prices should settle down. Typical large price spikes are anticipated as the remainder of the country begins switching to summer fuel next month.

Originally posted on Fleet Financials