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Analysts are warning that U.S. motorists could see a repeat of last summer’s high gasoline prices, as fuel stockpiles move to multi-year lows ahead of the summer driving season that begins in two months.
U.S. retail gasoline prices currently average $3.44/gallon, according to AAA, but they ran to a record $5.02/gallon last June.
Domestic gasoline stockpiles have fallen for five straight weeks, culminating in last week’s 6.4M-barrel drawdown that was the biggest since September 2021, leaving inventories at 229.6M, their lowest for this time of the year since 2015, according to weekly data from the Energy Information Administration.
U.S. gasoline futures gained 3.5% this week to $2.58/gallon, and the front-month contract has averaged $2.61 so far this month, compared with a five-year March average of $2.01 through 2022.
“We are in danger of going below 200M barrels of gasoline storage for the first time in many years,” Robert Yawger, director of energy futures at Mizuho, warned this week.
Declining inventories combined with rising travel could lift retail prices again this summer, with last summer’s $5/gallon a possibility again, Yawger said.
If refining margins continue their recent rise, “it is going to put upward pressure on the refined products prices, particularly on gasoline,” Again Capital’s John Kilduff said.
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Negative sentiment on oil prices likely will dominate the financial markets far into spring, Pacifica Yield writes in an analysis posted recently on Seeking Alpha.
Image and article originally from seekingalpha.com. Read the original article here.