Why Are US Gasoline Futures near a 1-Month Low?



US gasoline futures  

December gasoline futures fell 0.8% to $1.32 per gallon on November 16, 2016. Prices fell due to an unexpected rise in US gasoline inventories. We’ll look at gasoline inventories in Part 8 of this series.

Bearish momentum in crude oil (USO) (UCO) (PXI) prices also pressured gasoline prices on November 16, 2016. Gasoline prices are trading near a one-month low due to the restart of the Colonial pipeline and bearish momentum in crude oil prices in the last three weeks. 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 16, gasoline active futures rose 16% from their lows in February 2016 due to the increase in gasoline demand. However, gasoline active futures were 21% 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), Synergy Resources (SYRG), Noble Energy (NBL), Phillips 66 (PSX), Tesoro (TSO), Valero Energy (VLO), Western Refining (WNR), and Whiting Petroleum (WLL).

Uncertainty in crude oil prices also impacts ETFs and ETNs like the VelocityShares 3X Inverse Crude Oil ETN (DWTI), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), 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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