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Petroleum

Gasoline Prices Plummet in U.S. Markets Amid Changing Market Dynamics

Strategic Insights

— 2 min read

Gasoline prices dropped significantly in U.S. spot and futures trading, with July gasoline contracts on the New York Mercantile Exchange (Nymex) closing down 1.23 cents for the day and 4.60 cents for the week at 56.98 cents/gallon. The decline was attributed to various factors, including efforts to play futures against options, a need for players to back out of long positions, and the elimination of July contracts for August. The Gulf Coast cash market saw the largest decline, with regular and premium conventional gasoline prices dropping 2.70 cents to 49.50 cents and 54.65 cents, respectively.

Key Takeaways:

  • Gasoline prices fell sharply in U.S. spot and futures trading, with July contracts on the Nymex closing down 1.23 cents for the day and 4.60 cents for the week.
  • The decline was attributed to factors such as playing futures against options, backing out of long positions, and eliminating July contracts for August.
  • The Gulf Coast cash market saw the largest decline, with regular and premium conventional gasoline prices dropping 2.70 cents to 49.50 cents and 54.65 cents, respectively.
  • New York cash prices also slumped, but the shutdown of Ultramar Inc.'s refinery in Wilmington, Calif., helped prices rise in Los Angeles.
  • Some futures traders initially expected a short-covering rally in gasoline, but prices instead tumbled.
  • Hedging programs that lock in margins for the summer may be underpinning the decline in gasoline prices.
  • Heating oil prices also fell, finishing the day down 0.45 cents and the week down 2.09 cents at 46.31 cents/gallon in July Nymex futures.
  • Nymex light sweet crude started to follow the products down before bouncing back and settling virtually unchanged at $17.49/bbl, which was 1 cents lower for the day and $1.35 lower for the week.
  • Pessimism about the direction of crude markets led traders to suggest the Nymex August contract may test $16.50/bbl this week.
  • An upward correction could carry the August contract as high as $18.20, according to one trader.

Statistics:

  • July gasoline contracts on the Nymex closed down 1.23 cents for the day and 4.60 cents for the week at 56.98 cents/gallon.
  • The Gulf Coast cash market saw regular gasoline prices drop 2.70 cents to 49.50 cents and premium conventional gasoline prices drop 2.70 cents to 54.65 cents.
  • New York cash prices slumped, but the shutdown of Ultramar Inc.'s refinery in Wilmington, Calif., helped prices rise in Los Angeles.
  • Heating oil prices fell, finishing the day down 0.45 cents and the week down 2.09 cents at 46.31 cents/gallon in July Nymex futures.
  • Nymex light sweet crude started the day 1 cents lower and settled virtually unchanged at $17.49/bbl.
  • The August contract on the Nymex may test $16.50/bbl this week according to some traders.
  • The August contract could also rise as high as $18.20, depending on market conditions.

Sources:

  • Washington -- Gasoline prices took another dive Friday in U.S. spot and futures trading, while crude oil held its own in both physical and paper markets.
  • New York Mercantile Exchange (Nymex)
  • Washington -- Gasoline prices took another dive Friday in U.S. spot and futures trading, while crude oil held its own in both physical and paper markets.

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