May gasoline futures trading in NYMEX rose by 0.7% and settled at $1.39 per gallon on April 6, 2016. Gasoline prices rallied almost 30% from the lows in February 2016 to hit a 2016 high on March 22, 2016. The rise in gasoline demand led to the rise in gasoline prices. High gasoline prices support US refiners like Valero Energy (VLO) and Northern Tier Energy (NTI). They fell by 17% from the high on March 22, 2016, due to slowing gasoline demand. To learn more, read the next part of the series.
US average retail gasoline prices
The US average retail regular gasoline price fell by 0.8% and settled at $2.08 per gallon on April 4, 2016—compared to March 28, 2016. Gasoline prices are 13% less than the same period in 2015. Gasoline prices were on a roller coaster ride in 2015. In 1H15, gasoline prices rose because US drivers drove more miles. US consumers also purchased bigger cars and trucks that consume more fuel. In 2H15, gasoline prices fell due to oversupply.
EIA’s gasoline price forecast for 2016
The U.S. Energy Information Administration forecast that US retail gasoline prices, including taxes, will average $1.89 per gallon in 2016 and $1.97 per gallon in 2017. High gasoline prices could motivate oil refiners to produce more gasoline. As a result, it will lead to a rise in the refinery demand for crude oil. High crude oil prices benefit crude oil producers like Northern Oil & Gas (NOG) and Triangle Petroleum (TPLM).
The uncertainty in crude oil prices impacts ETFs like the DB Crude Oil Double Short ETN (DTO), the Direxion Daily Energy Bear 3x (ERY), the PowerShares DWA Energy Momentum (PXI), the United States Brent Oil (BNO), and the United States 12 Month Oil (USL).
Read the next part of the series to learn more about gasoline stocks.