October gasoline futures rose 2.5% and closed at $1.4 per gallon on September 21, 2016. Gasoline futures rebounded from weekly lows due to a larger-than-expected fall in US gasoline inventories. We’ll look at gasoline inventories in Part 8 of this series.
Bullish momentum in gasoline prices also supported crude oil prices on September 21, 2016. For more information on crude oil prices, please read Part 1 of this series.
Highs and lows
Gasoline prices hit a low of $1.14 per gallon—the lowest level in 12 years—on February 8, 2016. In contrast, prices hit $1.67 per gallon—the highest level since August 2015—on May 24, 2016.
As of September 21, 2016, gasoline prices were up 23% from the lows made in February 2016 due to the increase in gasoline demand. However, prices were 16.2% below their 2016 high. Gasoline inventories keep building despite strong demand. Read Will Gasoline Demand Support Gasoline and Crude Oil Prices? to learn more.
Impact on gasoline and crude oil prices
Lower gasoline and crude oil prices have a negative impact on US refiners and oil producers such as Western Refining (WNR), Tesoro (TSO), Valero Energy (VLO), Northern Tier Energy (NTI), Warren Resources (WRES), and Whiting Petroleum (WLL).
They also impact ETFs and ETNs like the VelocityShares 3X Inverse Crude Oil ETN (DWTI), the United States Gasoline Fund (UGA), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the iShares Global Energy ETF (IXC), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the PowerShares DWA Energy Momentum (PXI), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), and the Vanguard Energy ETF (VDE).
In the next part of this series, we’ll take a look at US retail average gasoline prices and forecasts.