Pump prices likely to remain steady for holidays despite spike in energy futures

Energy futures spike; pump prices still flat

Holiday travelers can expect gasoline prices to remain steady through the weekend even though energy futures spiked Wednesday on a big draw down of crude and gasoline supplies.

Energy experts were expecting the amount of crude in storage to fall, mostly because refiners empty their tanks at this time of year for tax purposes.

But crude fell by 5 million barrels last week, more than twice what was expected.

On top of that, the amount of crude being imported into the country over the past four weeks fell by 17 percent compared with last year, news that gave energy markets a jolt.

Imports for the week ended Friday fell to their lowest levels since March 2003, according to Platts, the energy information arm of McGraw-Hill Cos.

Crude and gasoline futures jumped nearly 3 percent after the government report the big draw in supplies. That could play out in several weeks at the pump, but only if those futures prices can be sustained.

Many energy experts do not believe that will happen.

There was a surprisingly healthy gasoline demand number released this week by MasterCard SpendingPulse, but analysts with the group pointed out that a lot of people filled up their cars for holiday travel before last week’s winter storms pounded the East Coast.

And the car is the transportation of choice for the vast majority of people traveling during the holidays, about 89 percent.

Gasoline prices have been hovering around $2.60 per gallon for weeks now as oil has traded close to $75 a barrel.

Prices at the pump were essentially flat overnight at $2.584 a gallon, according to AAA, Wright Express and Oil Price Information Service. That puts pump prices in the middle of their five-year average, even accounting for the giant swings in 2008 when prices were as high as $4.11 a gallon and as low as $1.61.

How much people travel can be more about confidence in the economy than pump prices and last year at this time the economic crises was in full swing.

AAA says the number of people traveling is on the rise, a sign that consumers are growing more confident, if slowly, about the economy.

“There is some evidence that demand has picked up,” said Andrew Lebow of MF Global.

Still, compared with past years demand for fuel remains very weak. Other factors, like the weak U.S. currency have kept energy prices elevated.

Because crude is priced in the U.S. currency, investors holding other currencies like the euro can buy more crude when the dollar falls.

Even before the U.S. Energy Information Administration released its weekly supply report Wednesday, crude prices were rising as the dollar fell.

Benchmark crude for February delivery rose $2.27 to settle at $76.67 on the New York Mercantile Exchange.

In other Nymex trading in January contracts, heating oil rose 6.54 cents to $2.014 while gasoline gained 5.57 cents to $1.9445. Natural gas rose 11 cents to $5.825 per 1,000 cubic feet.

In London, Brent crude for February delivery rose $1.53 to $74.99 on the ICE Futures exchange.

Associated Press writers Pablo Gorondi in Budapest and Alex Kennedy in Singapore contributed to this report.