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July 9th, 2018

The EIA (U.S. Energy Information Administration) released its gasoline inventory data on July 5. The EIA reported that US gasoline inventories decreased by 1.5 MMbbls (million barrels) to 239.7 MMbbls on June 22–29. However, the inventories increased by 2,388,000 barrels or 1% YoY (year-over-year).

Gasoline futures: gasoline inventory

A Reuters survey estimated that US gasoline inventories could have dropped by 0.8 MMbbls on June 22–29. US gasoline futures rose 0.6% to $2.13 per gallon on July 5 due to the larger-than-expected drop in gasoline inventories. Gasoline and crude oil futures usually move in tandem. Due to bearish factors, WTI crude oil futures fell 1.6% on July 5.

The iShares US Energy ETF (IYE) fell ~0.24% to $41.5 on July 5. The index is composed of US companies in the energy sector. Nabors Industries (NBR), TechnipFMC (FTI), CNX Resources (CNX), and Rowan Companies (RDC) decreased 2.7%, 2.2%, 2%, and 1.7%, respectively, on July 5. These stocks account for ~1.3% of IYE’s holdings.
US gasoline production and imports

US gasoline production increased 1.7% to 10,311,000 bpd (barrels per day) on June 22–29. However, production decreased by 54,000 bpd or 0.5% YoY.

US gasoline imports dropped ~34% to 648,000 bpd from June 22–29, 2018. The imports also decreased by 91,000 bpd or 12.3% YoY.
Impact

US gasoline inventories were ~6.2% above their five-year average for the week ending June 29, which could be bearish for gasoline and oil prices. If gasoline inventories drop below the five-year average, it could be bullish for gasoline and oil prices. If the excess inventories increase, it would be bearish for gasoline and oil prices.

Gasoline Futures: US gasoline demand

The EIA (U.S. Energy Information Administration) estimates that the four-week average US gasoline demand increased 2.4% to 9,701,000 bpd (barrels per day) on June 22–29. The demand also increased by 119,000 bpd or 1.2% YoY (year-over-year).

An increase in the gasoline demand is bullish for gasoline and oil prices. US gasoline and WTI oil futures have increased ~51% and ~72%, respectively, since June 21, 2017. WTI oil futures were near multiyear highs on June 29.

Gasoline Futures: gasoline demand

The United States Gasoline ETF (UGA) tracks US gasoline futures. UGA has increased ~53% since June 21, 2017. The VanEck Vectors Oil Refiners ETF (CRAK) increased 41.9% during the same period. CRAK has exposure to refining companies.

Delek Holdings (DK), PBF Energy (PBF), and HollyFrontier (HFC) account for 8.1% of CRAK holdings. These stocks have risen ~101.2%, ~103%, and ~168%, respectively, since June 21, 2017. These stocks were the top percentage gainers in CRAK’s holdings during this period.
US gasoline consumption estimates

US gasoline consumption averaged 9.32 MMbpd (million barrels per day) in 2016 and 2017. Gasoline consumption could average 9.34 MMbpd in 2018 and 9.38 MMbpd in 2019. Annual gasoline consumption could hit a record in 2018 and 2019 if the projections are achieved.
Impact

US gasoline demand reached a record high of 9,776,000 bpd for the week ending August 5, 2016.

The American Automobile Association estimated that a record 46.9 million Americans were expected to travel during the July 4 holiday. The estimate suggests strong demand for gasoline and crude oil. As a result, the gasoline demand could hit a new record in the coming weeks. The demand was 0.8% below the record level for the week ending June 29.

The US gasoline demand was ~3.4% above its five-year average, which is bullish for gasoline and oil prices.

 - Market Realist.



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Also: Crude Oil, Natural Gas, Heating Oil, Unleaded Gas, Ethanol, Gasoline Blendstock

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