US gasoline futures
January gasoline futures fell 1.3% to $1.53 per gallon on December 14, 2016. Prices fell due to the rise in US gasoline inventories. We’ll look at gasoline inventories in the next part of this series. Bearish momentum in crude oil (BNO) (PXI) (USL) (ERX) prices also pressured gasoline prices.
January 2017 WTI (West Texas Intermediate) crude oil futures contracts fell 3.7% and settled at $51.04 per barrel on December 14, 2016. For more on crude oil prices, read How Cushing Inventories and OPEC Are Pressuring Crude Prices.
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 falling crude oil prices and 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 December 14, gasoline active futures rose 51.5% from their lows in February 2016 due to the increase in gasoline demand. However, gasoline active futures were 7% below their 2016 high as of December 14, 2016. Read Gasoline Demand Impacts Crude Oil and Gasoline 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 Comstock Resources (CRK), Chevron (CVX), Phillips 66 (PSX), Northern Tier Energy (NTI), Tesoro (TSO), Apache (APA), Denbury Resources (DNR), Valero Energy (VLO), Western Refining (WNR), Goodrich Petroleum (GDP), and Whiting Petroleum (WLL).
The ups and downs in crude oil prices also impact ETFs and ETNs like the Fidelity MSCI Energy (FENY), the DB Crude Oil Double Short ETN (DTO), the Direxion Daily Energy Bear 3x (ERY), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the United States Gasoline Fund (UGA), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), and the Vanguard Energy ETF (VDE).
In this series, we’ll look at US gasoline and distillate prices and inventories. We’ll discuss how they impact crude oil prices.