August gasoline prices fell by 4.9% and settled at $1.36 per gallon on July 7, 2016. Prices followed the direction of crude oil prices. For more information on crude oil prices, read the first part of this series. Gasoline prices fell despite the marginal decline in US gasoline inventories. We’ll look at gasoline inventories more in Part 8 of this series.
On May 24, 2016, gasoline prices hit $1.67 per gallon—the highest level since August 2015. Prices have risen ~16% from the lows in February 2016 due to the increase in gasoline demand. Read What Are the Key Bullish Drivers for Crude Oil Prices This Week? to learn more about gasoline demand. Volatility in gasoline prices impacts US refiners such as Northern Tier Energy (NTI) and Valero Energy (VLO).
US retail gasoline prices
The EIA (U.S. Energy Information Administration) reported that the average US retail gasoline price fell for the second straight week. It fell by 1.3% week-over-week and closed at $2.29 per gallon for the week ending July 4, 2016. The US retail gasoline price hit its 2016 high of $2.40 per gallon during the week ending June 13. US retail gasoline prices are 18% less than they were in the same period in 2015. Prices are lower now due to strong gasoline production in 2014 and 2015.
EIA’s gasoline price forecast for 2016
ETFs that feel the impact
The ups and downs in crude oil prices influence ETFs such as the PowerShares DWA Energy Momentum Portfolio (PXI), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), and the United States 12 Month Oil Fund (USL).
In the next part of this series, we’ll take a look at US on-highway diesel fuel prices.