Brian L. Milne, Refined Fuels Editor, Telvent DTN
Wholesale gasoline prices were mixed for the week ending on Labor Day, as the transition from summer grade gasoline blends to the less expensive to produce winter gasoline formulas prompt different trading activity. Gasoline prices moved lower along the West Coast amid ample supply, while short covering pushed wholesale costs higher in Midwest and Rocky Mountain regions. Values were mixed along the East Coast, as Hurricane Earl failed to have a major impact on refining activity or holiday travel.
In the Midwest and Rocky Mountains, wholesale gasoline costs continue to find pricing support as suppliers turn tanks to make way for winter-grade product, creating short-term tightness. Buying ahead of the Labor Day holiday also lent upside price support for these regions, driving gains in the wholesale market. This activity has continued since late August, with wholesale costs in the Rocky Mountain region in particular well above year-ago quotes.
Nationally, oil prices and, in turn, gasoline prices continue to be directed by macroeconomic features, closely mimicking the activity in equity markets; namely the S&P 500. A strengthening or weakening US dollar has been a major influence on oil prices too, with that activity very volatile.
Seasonally, gasoline demand and prices decline in September, with a national surplus of gasoline in inventory strongly arguing for that trend to continue. A hurricane-triggered supply disruption could spike wholesale gasoline costs. This hurricane season, which runs from June 1 through Nov. 30, has had only one storm temporarily disrupting offshore oil production in the Gulf of Mexico, with several storms instead tracking the Eastern Seaboard. Previous forecasts suggest more hurricanes for the Atlantic Basin this season.
On Aug. 30, the Energy Information Administration said the US average price for regular grade gasoline slid to a $2.682 gallon six-month low. While the national trend is down, we could again see retail gasoline prices mixed regionally.
About the Author
Brian L. Milne is the Refined Fuels Editor for Telvent DTN-a leading business-to-business provider of real-time commodity information services. Milne has been focused on the energy industry for more than 14 years as an analyst, journalist and editor. He can be reached at firstname.lastname@example.org.