Gasoline Futures Climb Amidst Seasonal Fundamentals

Gasoline futures continued their upward trajectory on the New York Mercantile Exchange (Nymex) on Friday, with analysts predicting a further rise in prices as the April contract neared expiration. However, seasonal fundamentals weighed on futures prices for heating oil, while the news of the end of the oil workers' strike in Kuwait softened crude prices. As interest in buying gasoline contracts surged in the afternoon, market participants observed a similar buying pattern to that of Vitol S.A., who may have purchased 350 to 400 gasoline contracts. The contract for gasoline deliveries to New York Harbor in April closed at 57.82 cents/gallon, up 0.29 cents for the day and 2.45 cents for the week.

Key Takeaways:

• Gasoline futures continued their upward climb on the Nymex on Friday, with the April contract closing at 57.82 cents/gallon and the May contract closing at 57.51 cents/gallon.
• Seasonal fundamentals tripped up futures prices for heating oil, despite the ongoing strike in Kuwait softening crude prices.
• Analysts at Pegasus Economic Group predicted a good chance of a rise in gasoline prices, but cautioned that liquidation of long positions ahead of the April contract's expiration would have a dampening effect.
• Vitol S.A. may have purchased 350 to 400 gasoline contracts in the afternoon, with New York "locals" also participating in buying activity.
• The Nymex contract for light crude oil closed at $18.78/bbl, down 14 cents for the day but up 62 cents for the week.
• Backwardation, where prices are lower for deliveries further in the future, discouraged refiners from holding crude and gasoline in inventory in anticipation of price appreciation.

Statistics:

• Gasoline futures prices:

+ April contract: 57.82 cents/gallon (up 0.29 cents for the day and 2.45 cents for the week)

+ May contract: 57.51 cents/gallon (up 0.23 cents for the day)

• Nymex contract for light crude oil: $18.78/bbl (down 14 cents for the day, up 62 cents for the week)
• Inventory levels: Refiners discouraged from holding crude and gasoline in inventory due to backwardation.

Sources:

• New York Mercantile Exchange (Nymex)
• Pegasus Economic Group
• Vitol S.A.