NYMEX-traded gasoline futures contracts for June delivery rose by 0.6% to $1.58 per gallon on April 27, 2016. Gasoline prices followed the bullish momentum of crude oil prices. For more on crude oil prices, read Part 1 of this series. US gasoline prices are also driven by the US gasoline inventory. To learn more, read Part 6 of this series. Gasoline prices also rose due to increased gasoline demand. The expectation of a rise in the gasoline demand in 2016, compared to 2015, due to the summer driving season could also benefit gasoline prices in the near term. To learn more about gasoline demand, read Analyzing the US Crude Oil Inventory and Gasoline Demand.
US retail gasoline prices
On April 27, 2016, the EIA (U.S. Energy Information Administration) released its “This Week in Petroleum” report. It reported that average US retail gasoline prices rose by 1.7% week-over-week. The prices closed at $2.16 per gallon on April 25, 2016. The prices are ~16% less than the same period in 2015. US retail gasoline prices have fallen due to strong gasoline production in 2014 and 2015. As a result, gasoline prices are near their lowest level in the last 12 years.
EIA’s gasoline price forecast for 2016
In its STEO (Short-Term Energy Outlook) report, the EIA forecast that US retail gasoline prices, including taxes, will average $1.94 per gallon in 2016. Then, they would average around $2 per gallon in 2017. High gasoline prices benefit US refiners like Valero Energy (VLO) and Delek US Holdings (DK). Similarly, high crude oil prices support upstream players like Swift Energy (SFY), Northern Oil & Gas (NOG), Warren Resources (WRES), Energy XXI (EXXI), and Triangle Petroleum (TPLM).
The ups and downs in crude oil prices impact ETFs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the PowerShares DWA Energy Momentum Portfolio (PXI), the iShares Global Energy ETF (IXC), the iShares U.S. Energy ETF (IYE), the United States Brent Oil Fund (BNO), and the United States 12 Month Oil Fund (USL).
Read the next part of the series to learn more about US on-highway diesel fuel prices.