PARIS (ResourceInvestor.com) -- Gasoline has continued its rise on the back of more dodgy refineries, increased demand and it has kept the price of crude healthy and above the $60 per barrel range. The thing is there does not seem to be any reason in the near future for crude to fall too far.
Instead a number of bullish factors - gasoline price, company troubles, geo-politics, the weather - are readying themselves, like an unpleasant obstacle course for barrels of light sweet.
There was a 4.4 million barrel draw in gasoline inventories on the eastern seaboard and in the U.S. as a whole – the only place that really matters – gasoline rose on average by 7.4 cents per gallon, to reach a tidy $2.87 per gallon.
That means that gasoline is up over 70 cents since the start of the year and year on year we are looking at around an 11.5 per cent rise.
Currently exacerbating the problem are two major elections, France and Nigeria. The French may have companies like Total [NYSE:TOT] and Maurel et Prom [Paris:MLFMM] doing pretty well in Africa, they may have the large service company Technip but their politicians are far less promising.
The inheritor of Jacques Chirac’s mantle may well be his fellow party member Nicolas Sarkozy. Sarkozy is seen as being the man who can bring the so-called “free market” to France and revitalise its economy. It might have passed a few people by but France is still the sixth biggest economy in the world, so despite its 35 hour week and best-in-the-world national health service it is not doing too badly.
But as an Organisation for Economic Co-operation and Development (OECD) nation it certainly consumes its fair share of crude oil. The politicians of France are not going to change that or its devotion to nuclear power.
What is more important is the election in Nigeria, which is threatening to spawn even more violence. The country that could produce somewhere around 2.8 million barrels per day is currently lifting around 2.3 million barrels per day because of the long standing problems in the southern Niger delta.
But the regional and now presidential elections have thrown up more bloodshed, corruption and very little hope. Armed men have stormed polling stations and taken ballots and now the actual slips to enable voting for the presidential election have not arrived in the country 24 hours before voting is due to begin. And this is the country the U.S. is relying on to produce and increasing share of its oil.
Around the southern oil town of Port Harcourt the ruling party the People's Democratic Party of Nigeria (PDP) have won elections for the local appointees. Of course there was violence, politicians have traditionally hired various armed men to intimidate, steal and so on. What happened after the last election however was disappointed armed men who suddenly were left out of the loop, really got angry.
Already there are signs that this could happen again. Meanwhile, even before the election various candidates are saying they will contest the results, presumably if they do not win of course.
This has all the hallmarks of a bullish effect on crude do you not think? Another problem that will not go away are the troubles at BP [NYSE:BP]. This week another set of workers were rushed to hospital with sickness and eye irritation. Of course they came from the fantastic Texas City refinery facility where 15 died and 180 were injured in March 2005. This of course does not help the price of gasoline, which does not help the price of crude.
So on we go and all of a sudden all we need is a supply side shock and records could be broken again. Iran? Hurricanes? Inflation? The dollar? All of them? The bulls are back.
