US Gasoline Futures Driving towards 2015 Low

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Fuel Marketer Intelligence: Supply Chain Dynamics to Retail Fuel Prices

The seasonal attributes of the gasoline market in the United States are on clear display, with gasoline demand sliding since summer’s end, and gasoline inventory restocked to a pre-peak season level, while gasoline futures dropped 34% in value from the start of the third quarter until its end.

Driving demand in the US is greatest during the summer months, and consistently declines from August to September as families wrap up vacations and kids return to school.

Although down nearly 5% in September from August, implied gasoline demand remains well above the comparable year-ago period, averaging 4.2% higher than in 2014 during the four weeks ended Sept. 25 at 9.059 million bpd, data from the Energy Information Administration shows, continuing the 2015 trend.

The confluence of lower gasoline prices, a better employment disposition in the US and a more confident consumer has spurred greater driving demand in 2015. For the year through Sept. 25, implied gasoline demand is 4.1% above the comparable timeline in 2014 at 9.14 million bpd.

US regular grade gasoline averaged $2.322 gallon Sept. 28, a seven-month low, following the average’s sixth consecutive weekly decline. The national average remains on track to slip below $2 gallon by year’s end.

Domestic gasoline supply continues to climb, with inventory at 222.0 million bbl—the highest since mid-May. With the exception of a small drawdown in late August, gasoline stocks have increased consistently since mid-August, climbing from a 212.8 million bbl better-than nine-month low.

During the second trade day of the fourth quarter, the gasoline futures contract on the New York Mercantile Exchange tested the September low of $1.30 gallon. A break below the technical support point opens the door for a test of the 2015 low of $1.2265 gallon established during the second week of the year. The Reformulated Blendstock for Oxygenate Blending futures contract with nearest delivery reached a 2015 high in June at $2.1858 gallon.