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Gasoline Futures and Crude Oil Prices Diverged


Nov. 20 2020, Updated 2:12 p.m. ET

US gasoline futures  

April gasoline futures fell 1.3% to $1.58 per gallon on March 15, 2017. Prices fell despite the fall in US gasoline inventories. We’ll look at gasoline inventories in the next part of this series.

Crude oil (IXC) (FXN) (FENY) (SCO) and gasoline futures usually move together. However, prices diverged on March 15, 2017. For more on crude oil prices, read Part 1 of this series.

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Highs and lows  

On February 26, 2016, US gasoline active futures contracts hit a low of $1.01 per gallon—the lowest level in 12 years. Gasoline prices fell due to falling crude oil (IEZ) (RYE) (ERX) prices and strong gasoline production between 2014 and 2016, as you can see in the above chart. As of March 15, 2017, gasoline active futures have risen 56.4% from their lows in February 2016 due to the increase in gasoline demand and recovery in crude oil prices in early 2016.

Higher gasoline and crude oil (USO) (UCO) prices could have a positive impact on US refiners and oil producers such as Valero Energy (VLO), Whiting Petroleum (WLL), Phillips 66 (PSX), and Triangle Petroleum (TPLM).

On December 29, 2016, prices hit $1.68 per gallon—the highest level since August 2015. As of March 15, 2017, gasoline active futures fell 6% from their highs in December 2016 due to the decrease in gasoline demand in early 2017 and high gasoline inventories.

In the next part of this series, we’ll take a look at US gasoline inventories and how they impact gasoline and oil prices.


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