Transcripts

Crude Inventories Are Up & So Are Gas Prices

JEFF YASTINE: Energy prices fell today after the government reported an increase in crude oil and gasoline stockpiles. The June contract for crude lost $0.62 to $62.55 a barrel in New York trading. But as Suzanne Pratt reports, American consumers are unlikely to get much relief from record high gasoline prices this summer.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: In New York City, prices at the pump are among the highest in the country, ringing up well above $3 a gallon. Experts say drivers nationwide will probably pay even more to fill up in the coming months. Bank of America analyst Bruno Stanziale says the primary reason is that gasoline inventories are still too low to meet demand.

BRUNO STANZIALE, OIL ANALYST, BANK OF AMERICA: Stocks of finished gasoline are way below where they need to be. Refiners are under a constant struggle between producing gasoline and at the same time, sacrificing production of other products. So, the whole system is strained.

PRATT: Today, the government reported larger than expected increases in stockpiles of crude oil, gasoline and distillate fuels. The weekly report also showed refinery utilization rates climbed to 89.5 percent suggesting slow recovery from a stretch of unplanned repairs. Man Financial oil trader Chris Motroni says he`s still worried about the state of U.S. refineries.

CHRISTOPHER MOTRONI, OIL TRADER, MAN FINANCIAL: These refineries are kind of running well. How does something kind of run well? It`s a concept that bothers me. So, that`s how uneasy I feel regarding all of the refineries in the Gulf.

PRATT: While the inventory increases and improved refining capacity reported today could push prices lower in the next few weeks, experts say a decline is unlikely to hold. That`s because the U.S. is only weeks away from the start of the peak summer driving season when gasoline demand surges. Experts say there`s simply not enough time to bring stockpiles to levels that would make the oil market more comfortable. The national average for unleaded gasoline is currently $3.10 a gallon and $3.41 for premium, well above last year`s prices. Some experts predict this summer, drivers in many U.S. cities will pay $4 a gallon.

MOTRONI: If the increased demand continues with the minimal supply that we have, that`s just basic economics where you`re going to see $4 a gallon at the pump.

PRATT: The energy market is also facing the wildcard of Mother Nature. Experts say with supply already an issue, any major storm this hurricane season and gas prices skyrocket. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.