Gas Prices Plummet as Reformulated Gasoline Market Worry Fades

Traders' fears of a surplus in reformulated gasoline fueled a price drop in gasoline futures on the New York Mercantile Exchange (Nymex), with prices falling to 47.16* per gallon Monday. The price decline was sparked by concerns over Pennsylvania's effort to withdraw 28 counties from the reformulated gasoline program, which could lead to a surplus of "backed out" reformulated gasoline in the Pennsylvania market. Meanwhile, crude oil prices also fell, with the Nymex light crude contract trading at $16.91 per barrel, down 10* from Friday. However, natural gas prices bucked the trend, increasing 9.3* to $1.728 per million British thermal units, despite mild December weather.

Key Takeaways:

Gasoline futures prices on the Nymex fell to 47.16* per gallon, down 2.2* from Friday's close.
The price drop was triggered by confusion over changes in the reformulated gasoline program after Pennsylvania's effort to withdraw 28 counties.
Crude oil prices followed gasoline down, with the Nymex light crude contract trading at $16.91 per barrel, down 5.2% from Friday.
Natural gas prices increased 9.3* to $1.728 per million British thermal units, despite mild December weather.
Tom Curtis, director of energy research for Pegasus Econometric Group, suggested that gas was overbought and likely to turn down.
The price of conventional gasoline edged down only slightly in the spot markets.

Statistics:

Gasoline futures prices on the Nymex fell 2.2% to 47.16* per gallon.
The price drop was 1.25* per gallon from Friday's close.
Crude oil prices fell 5.2%, or 10*, from Friday to $16.91 per barrel.
Natural gas prices increased 9.3* to $1.728 per million British thermal units.
The Nymex light crude contract traded at $16.58 per barrel, a low for the day.

Sources:

U.S. Energy Information Administration (no specific date)
Tom Curtis, director of energy research for Pegasus Econometric Group (no specific date)
New York Mercantile Exchange (Nymex) (no specific date)