U.S. Gasoline Markets Point to Bad News for Biden This Summer
Bloomberg
Published Jan 12, 2022 09:11AM ET
Updated Jan 12, 2022 10:19AM ET
U.S. Gasoline Markets Point to Bad News for Biden This Summer
(Bloomberg) -- The gasoline market is painting a picture of tight supplies this summer -- the last thing Joe Biden will want to see as he tries to contain high fuel prices.
On the New York Mercantile Exchange, futures contracts for gasoline are in an increasingly bullish structure called backwardation. They show that those who trade the fuel expect a summer of relatively weak supply and strong demand. And that doesn’t bode well for a U.S. president who’s trying to keep fuel costs low.
The U.S. typically builds its supplies of gasoline from November through February. Then, they’re drawn back down in spring and the summer driving season.
This year, inventories are starting off well below the seasonal norm and there are signs that work on oil refineries could slow the buildup of stockpiles. ExxonMobil (NYSE:XOM) Corp.’s Baytown oil refinery, the fourth largest in the U.S., has suffered a fire and this spring’s refinery maintenance season is set to be heavy. Demand, meanwhile, has been trending above normal. Supplies are also low in Europe -- one of the country’s biggest suppliers.
This summer’s backwardation -- whereby more immediate contracts are priced at a premium to later ones -- is currently much steeper than it’s been at this time of year since at least 2017. It’s also more deeply backwardated than Brent crude, the global oil benchmark.
The Biden administration has invested a lot of time and effort in jawboning oil prices lower and orchestrating a global release of strategic petroleum reserves.
©2022 Bloomberg L.P.
Get The News You Want
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.