Falling oil prices could blunt ‘spring fling’

Slide reaches 5 days; relief at pump likely

A side effect of this week’s big slide in oil prices is that the annual spring pump price runup in the Upper Midwest might be a bit more muted than usual.

Every spring, pump prices usually take a big jump as refineries switch to making reformulated summer blend gasoline to comply with federal clean air mandates.

Oil prices moved lower for the fifth day in a row on Friday. Benchmark U.S. oil dropped another 79 cents, or 1.6%, to $48.49 a barrel. After small losses early in the week, the price of U.S. crude dropped 9% during the past three days after the government reported a big increase in stockpiles.

Brent crude, the international standard, lost 82 cents, or 1.6%, to $51.37 a barrel in London.

Statements this year from the OPEC cartel about how its members, especially Saudi Arabia, were going to cut production haven’t led to less oil in the world. In fact, U.S. crude oil stockpiles are 10 million barrels ahead of where they usually are at this time of year, said Jim Ritterbusch, president of Ritterbusch and Associates, an oil market trading and advisory firm in northern Illinois.

“It was a bad plan from the get-go,” Ritterbusch said of OPEC’s bluster regarding production cuts. “It’s interesting but it’s just a testament to the brief market process and the more the Saudis mess with it, the more they are going to get burned now that we have all this shale production on board (in the U.S.).”

Going forward, “We’re going to get that usual spring lift in prices, but with the prices coming off 7% or 8% this week in gasoline, that is going to blunt a lot of that impact,” Ritterbusch said. “I just see more stability at the pump. We’re going to see more of it, notwithstanding the ‘spring fling.’ ”

Look for near-term prices at the pump to fall, provided there are no refinery fires/explosions/outages in the U.S. and no new unrest in oil producing regions of the world.

“Just looking out over the next two or three weeks, before we see the switch-over (to reformulated gas,) you’re going to see more relief at the pump, and we could see values draft on down as much as 7 to 10 cents (a gallon) in Milwaukee,” Ritterbusch said.