US gasoline futures
January gasoline futures rose 0.7% to $1.42 per gallon on November 23, 2016. Prices rose despite the larger-than-expected rise in US gasoline inventories. Prices might have risen due to increased traveling during the Thanksgiving holiday. We’ll look at gasoline inventories in the next part of this series.
Gasoline prices recovered from a one-month low due to the bullish momentum in crude oil prices in the last two weeks. For more information on crude oil prices, read Part 1 of this series.
Highs and lows
Gasoline active futures contracts hit a low of $1.01 per gallon—the lowest level in 12 years—on February 26, 2016. Gasoline prices fell due to the strong gasoline production in 2014 and 2015, as you can see in the above chart. On May 27, 2016, prices hit $1.64 per gallon—the highest level since August 2015.
As of November 23, gasoline active futures rose 40% from their lows in February 2016 due to the increase in gasoline demand. However, gasoline active futures were 13% 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), Noble Energy (NBL), Apache (APA), Chevron (CVX), Phillips 66 (PSX), Tesoro (TSO), Valero Energy (VLO), Western Refining (WNR), Warren Resources (WRES), 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 Oil ETF (USO), 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 gasoline inventories.