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Why Did US Gasoline Futures Fall?

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Nov. 10 2016, Published 12:31 p.m. ET

US gasoline futures 

December gasoline futures fell 0.7% to $1.36 per gallon on November 9, 2016. Prices fell despite the larger-than-expected fall in US gasoline inventories. We’ll look at gasoline inventories in Part 8 of this series.

Gasoline prices fell despite the rise in crude oil (USO) (UCO) (PXI) prices on November 9, 2016. Gasoline prices fell due to the restart of the Colonial pipeline on November 6, 2016. The Colonial pipeline supplies 2.5 MMbpd (million barrels per day) of refined products in the US East Coast. For more information on crude oil prices, read Part 1 of this series.

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Highs and lows  

Gasoline active futures contracts hit a low of $1.14 per gallon—the lowest level in 12 years, on February 8, 2016. On May 24, 2016, prices hit $1.67 per gallon—the highest level since August 2015.

As of November 9, gasoline active futures rose 19.3% from their lows in February 2016 due to the increase in gasoline demand. However, gasoline active futures were 19% below their 2016 high. Read Why US Gasoline Demand Is Important for Crude Oil Prices to learn more. 

Impact on gasoline and crude oil prices 

Lower gasoline and crude oil prices could have a negative impact on US refiners and oil producers such as Northern Tier Energy (NTI), Warren Resources (WRES), Apache (APA), Noble Energy (NBL), Phillips 66 (PSX), Tesoro (TSO), Valero (VLO), Western Refining (WNR), and Whiting Petroleum (WLL).

Moves in crude oil prices also impact ETFs and ETNs like the VelocityShares 3X Inverse Crude Oil ETN (DWTI), the United States Gasoline Fund (UGA), the VelocityShares 3x Long Crude Oil ETN (UWTI), the Direxion Daily Energy Bull 3x Shares ETF (ERX), 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 average retail gasoline prices and forecasts. 

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