China temperatures to tumble in eastern areas (trans)*
U.S/U.K. ask Gulf monarchs for more oil ($WSJ)
Saudi Arabia’s strained relations with the West
U.S. gas and power bill arrears are rising ($FT)
U.S. oil importers race to beat Russian embargo
Commodity traders and systemic risks ($BBG)
Ukraine/Russia peace negotiations ($FT)
* Temperatures are predicted to fall by -20°C or more in the most densely populated areas of eastern China, which are also the ones which rely most heavily on gas to meet heating demand
U.S. PRESIDENT Joe Biden has complained that the retail price of gasoline has remained high even as crude prices have fallen in recent days. “Oil and gas companies shouldn’t pad their profits at the expense of hardworking Americans,” he posted on Twitter on March 16, hinting at the possibility of anticompetitive behaviour in the fuel market.
Gasoline prices have broadly tracked the rise and fall in crude prices since at least 2010. Variations in the price of crude explain nearly all the variation in prices paid at the pump. Gasoline prices were indeed anomalously high at the start of the week. But this was likely the result of timing differences in the supply chain.
While crude is priced on a second-by-second basis in futures markets, wholesale and retail prices are adjusted must less frequently. Differences in pricing frequency create the possibility of temporary divergences along the supply chain especially when crude prices are moving very fast.
Last week saw an unprecedentedly rapid decline in crude oil prices. In dollar terms, the decline in Brent futures prices over the week to March 14 was the second-largest weekly fall since 1993. In percentage terms, the fall in crude prices was the 12th largest (n = 1510).
It will take a few days for gasoline prices to catch up. But the White House presented no convincing evidence of anticompetitive behaviour in the retail gasoline market. The administration’s primary purpose seems to be political – to deflect voter concerns about the rising price of fuel and the rising cost of living more generally:
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