4 May

US Crude Oil and Gasoline Futures Moved Together

WRITTEN BY Gordon Kristopher

US gasoline futures  

June gasoline futures contracts rose 1.3% to $1.53 per gallon on May 3, 2017. Prices rose due to the less-than-expected rise in US gasoline inventories. We’ll look at gasoline inventories in the next part of this series.

Gasoline and crude oil (FENY) (BNO) (XES) futures moved in the same direction on May 3, 2017. For more on crude oil prices, read Part 1 of this series.

US Crude Oil and Gasoline Futures Moved Together

Highs and lows  

On February 26, 2016, US gasoline active futures contracts hit a low of ~$1 per gallon—the lowest level in 12 years. Gasoline prices fell due to falling crude oil (ERY) (ERX) prices and strong gasoline production between 2014 and 2016, as you can see in the above chart. As of May 2, 2017, gasoline active futures have risen 53% 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 (ERY) (ERX) prices have a positive impact on US refiners and oil producers such as Phillips 66 (PSX), Valero Energy (VLO), Continental Resources (CLR), and Denbury Resources (DNR).

On April 12, 2017, prices hit $1.77 per gallon—the highest level since August 2015. As of May 2, 2017, gasoline active futures are 14% below their highs due to the fall in gasoline demand.

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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