Tuesday, April 14, 2015

Prepare for a Summer Gasoline Rally?

Gasoline demand in the United States typically peaks in the summer months as people emerge from their winter hibernation, take vacations and just drive more in general.  Additionally, US regulations require a summer fuel blend that is more expensive to produce.  The combined factors of increased demand and a more expensive product can often lead to spikes in price.  However, given the unique situation of crude and gasoline stocks this year, should traders anticipate rising prices?
Crude oil prices have fallen dramatically since late 2014, as fracking production has helped to rack up record supplies.  Today's WTI crude prices are about half what they were last year at this time: 
 
  chart provided by Barchart.com
According to the EIA, crude oil stocks continue to build and we remain well above the five year average, with total stocks at 482.4 million barrels, compared with 384.1 million a year ago. (more)

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