gasoline futures

gasoline futures

February 5, 2015

Retail gasoline in the U.S. has risen 8.4 cents in the past two days, according to Heathrow, Florida-based AAA, the largest two-day increase since March 2011. The national average hasn’t fallen since Jan. 25, when it broke a 123-day losing streak.

The spike at the pump follows a 14 percent gain in oil prices and maintenance shutdowns at refineries. Demand for gasoline is at the highest seasonal level since 2008.

“Drivers had a great run of steadily declining gas prices, but that trend is over for now,” said Michael Green, a Washington D.C.-based spokesman for AAA. “The market has been volatile, but it’s a safe bet that drivers will pay more in March than they are today.”

The average retail price was $2.151 a gallon Wednesday, AAA said, after sinking to $2.033 on Jan. 25, the lowest level since March 2009. The U.S. government had estimated the drop from a peak of $3.696 in April 2014 would save the average household $750 this year.

West Texas Intermediate futures rose as high as $53.05 a barrel this week from below $45 the week before. The March contract traded at $51.93 a barrel at 11:50 a.m. New York time.

Pump prices in 15 U.S. states remained below $2 a gallon on Wednesday, with Idaho home to the cheapest at an average $1.882 a gallon, AAA data show. The lowest price reported to in the state was $1.52 a gallon at three stations as of 12:22 p.m. New York time.

Gasoline Futures: Refinery Shutdowns

Refineries from California to Pennsylvania have shut units to perform seasonal maintenance. Plants typically use the period from January through March to make routine repairs and upgrades before fuel demand increases before summer.

“This time of year we usually see prices go up,” Gregg Laskoski, a Tampa, Florida-based senior petroleum analyst for GasBuddy Organization Inc., said by phone. “Reduced output from refineries always stresses supply. Depending on a lot of things like the weather and size and scope of each refinery, sometimes it can take a couple weeks, sometimes seven to eight weeks.”

When refiners return from maintenance, they will begin to adjust their gasoline production, blending in more expensive products in order to meet tighter emissions specifications for summer.

Gasoline demand averaged 8.8 million barrels a day in the four weeks ended Jan. 30, the highest level for that time of year since 2008. U.S. car and light truck sales rose 14 percent in January from the previous year to 1.15 million, according to Wards Automotive Group.

“It’s those three things — refinery maintenance, summer specs and economic growth,” said Carl Larry, Houston-based director of oil and gas at Frost & Sullivan. “It was a nice little vacation around $2, but we’re moving back up.”

- Dan Murtaugh in Houston and Lynn Doan in San Francisco at Bloomberg.