gasoline futures prices

gasoline futures prices

May 3rd, 2018

The EIA released its weekly gasoline inventory data on May 2. It reported that US gasoline inventories increased by 1.1 MMbbls (million barrels) to 237.9 MMbbls from April 20 to 27. However, gasoline inventories dropped by 3.2 MMbbls or 1.3% year-over-year.

gasoline

Analysts had estimated that US gasoline inventories could have declined by 0.6 MMbbls from April 20 to 27. US gasoline futures fell on May 2 due to an unexpected build in gasoline inventories. US gasoline futures fell 0.3% to $2.07 per gallon. The United States Gasoline ETF (UGA) aims to follow the performance of US gasoline futures. UGA fell ~0.7% to $33.05.

Gasoline and crude oil futures usually move together. US oil futures rose 1%. The United States 12 Month Oil Fund (USL) aims to track the performance of WTI oil futures. USL rose ~0.5% to $23.6.
US gasoline production and demand

US gasoline production increased 1.6% to 10,045,000 bpd (barrels per day) from April 20 to 27. Production also increased by 262,000 bpd or 2.7% from a year ago.

US gasoline demand increased 0.1% to 9,090,000 bpd from April 20 to 27. However, demand decreased by 66,000 bpd or 0.7% from a year ago. The year-over-year drop in gasoline demand is bearish for gasoline prices.

Lower gasoline prices relative to crude oil prices are usually bearish for refining companies. US crude oil prices rose 1% on May 2, while US gasoline futures fell 0.3% on the same day. The VanEck Vectors Oil Refiners ETF (CRAK) rose 0.2% to $32.28. CRAK has exposure to refining companies.
Impact

US gasoline inventories were ~4.5% above their five-year average, which is bearish for gasoline and oil prices. If US gasoline inventories decline below the five-year average, it could be bullish for gasoline and crude oil prices.

Next in this series, we’ll cover US distillate inventories.

- By Gordon Kristopher Market Realist.