Bullish Momentum: Gasoline and Gas Oil Markets Surge.

Gasoline and gas oil markets are in the midst of rapid change as inventories dwindle and geopolitical tensions escalate. In the week leading up to March 29, gasoline inventories dipped by 4.3 million barrels, despite robust production averaging 10 million barrels per day (bpd). However, a subtle dip of 0.5% in motor gasoline product supplied over the past four weeks compared to the same period last year hints at a nuanced demand-supply equilibrium.

Geopolitical unrest further complicates the situation. Recent strikes on Russian territories by Ukrainian forces, coupled with Houthi militant attacks in the Red Sea, have disrupted crude deliveries, necessitating diversions around the Cape of Good Hope. British intelligence estimates suggest that these assaults have disrupted up to 10% of Russia's refining capacity, intensifying concerns over supply stability.

In response to these dynamics, RBOB Gasoline prices surged by 10% to $2.7720 per gallon, while NY Harbor ULSD climbed by 7.6% to $2.7538 per gallon over the past month. Looking forward, gasoline futures are poised for further increases as expectations of heightened demand, driven by increased travel and tourism activities with the onset of spring, loom large.

Indeed, indications of rising demand are already visible, with gas consumption rising from 8.72 million bpd to 9.23 million bpd. This upward trend, coupled with oil prices hovering around the mid-$80s per barrel, sets the stage for a gradual uptick in gas prices.