New York oil traded in a narrow range around $93 a barrel this week, closing a touch higher on Wednesday on better news about the US economy. Brent continued last week’s plunge closing on Wednesday at $111.89 a barrel, down $6 a barrel in the last 10 days. The indecisive Italian elections and the renewed nuclear talks with Iran were the main factors behind Brent’s plunge.
New York gasoline futures prices continued their freefall this week and are now down nearly 30 cents a gallon since early last week. Retail gasoline has not yet caught up with the rapid futures decline and continued to creep up a bit this week hitting a national average of $3.78 on Wednesday. US refineries operated at 85 percent of capacity last week processing 335,000 more b/d than in the previous week indicating that some are coming out of maintenance ready to produce summer grades of gasoline.
US crude inventories were up 1.1 million barrels last week, but gasoline inventories decreased by 1.9 million barrels. Given the very high gasoline prices, $4 plus in some states this week, it is likely that the drop in the US gasoline inventory was due to exports rather than domestic consumption. Stockpiles at Cushing, Okla. fell by 75,000 barrels last week and are now down to 50.6 million barrels after hitting a record high of 51.9 million in mid-January.
The Italian election, which resulted in a three-way split, leaving no party with the votes to govern or form a coalition, was the major political news so far this week. The fragmentation of the Italian political scene has left many observers worried about the economic future of Italy, and by extension southern Europe and even the whole Eurozone.
Iran and the six major powers met in Almaty for two days and then adjourned without reaching any agreements. There will be a follow-up technical meeting in Istanbul on March 18th and then the discussions will reconvene in Almaty on April 5th. Most western observers see little hope for progress, but Tehran continues making optimistic statements.
The war in Syria continues with Damascus, under Russian pressure, saying it is willing to meet with representatives of the rebels. In the meantime, the US is going to openly send military aid to the rebels not including weapons.
California Lithium Battery (CalBattery) announced that it has signed a licensing agree with DOE’s Argonne National Laboratory for Argonne-developed anode material for high-energy lithium batteries. If all goes well CalBattery hopes to be in commercial scale production of the anode material by 2014. Independent tests of this new material show that it has an energy density some 3X greater than that of existing lithium batteries. Even more interesting is the claim that the new batteries will cost 70 percent less to produce than batteries currently being used in hybrid and electric vehicles. If all this works out in practice, we could be on the verge of an era when electric cars have a range and a price to be practical substitutes for those with internal combustion engines.