Gasoline and Gas Oil Futures as we head into the Summer.

As we approach the summer season, the dynamics of gasoline and gasoil futures are becoming increasingly important. Despite geopolitical tensions in the Middle East, gasoline futures in the US are hovering near the 2.82 on April 16th. The lack of significant damage from recent military strikes and Tehran's downplaying of the situation have eased concerns of escalated warfare in the region, leading to expectations that oil trade will continue unimpeded.

However, the situation remains fluid, with the potential for further conflict in the Middle East posing a risk to crude oil supplies. This, coupled with rising gasoline demand as we move into the summer months, could put upward pressure on prices. Data from the EIA shows that gasoline demand is edging higher, while stocks fell in the week ending April 12th. Despite this, supply remains ample as crude oil stocks rose significantly.


The graph above shows the historical futures prices for RBOB Gasoline and NY Harbor ULSD for the past one month. We observe multiple spikes and dips that are a representation of the volatility in the prices of RBOB Gasoline and NY Harbor ULSD.

Inflation is another key factor to consider. The March 2024 Consumer Price Index (CPI) report showed a stronger-than-expected year-on-year increase of 3.5%, suggesting that the path to the Fed’s 2% inflation target could take longer than expected. This, along with rising gasoline prices, could reduce consumer purchasing power over the summer.

Given the potential for heightened geopolitical tensions, gasoline and gas oil futures may experience increased volatility. As a result, consumers and investors should remain vigilant and closely monitor these developments.

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