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Petroleum

Gasoline Prices Plummet on New York Mercantile Exchange

Strategic Insights

— 2 min read

The New York Mercantile Exchange (NYMEX) witnessed a sharp selloff in gasoline futures on September 19, 1995, amidst reports of 1 million barrels of gasoline arriving in New York. This led to a collapse in gasoline prices, with the October 1995 gasoline contract plummeting to a 3-week low of 54.30 cents per gallon. The crude oil futures contract also declined, with the November 1995 contract dropping 51 cents to $17.56 per barrel. Traders attributed the sell-off to technical selling and funds liquidating their long positions, which led to a breakdown in support levels. The market's reaction was swift, with gasoline prices averaging 56 cents-57 cents per gallon, compared to 54 cents-55 cents a month ago and 44 cents-45 cents a year ago.

Key Takeaways:

  • The gasoline contract for October 1995 delivery sank to a 3-week low of 54.30 cents per gallon due to reports of 1 million barrels of gasoline arriving in New York.
  • The collapse of the gasoline contract had a ripple effect on the Nov 1995 crude oil future contract, which dropped 51 cents to $17.56 per barrel on September 19, 1995.
  • Reports of three shipments arriving in the New York Harbor area, carrying up to 1 million barrels of reformulated gasoline, triggered aggressive selling and pushed gasoline prices to three-week lows.
  • Much of the sell-off was due to funds liquidating their long positions and rolling out of the October contract before its expiration next Friday.
  • Bargain-hunting and short-covering are expected to help prices rebound, according to a New York-based trader.
  • William H. Brown III, president of W.H. Brown & Co., predicted that crude prices will rally again, but to levels below those seen in the past few weeks, possibly reaching $16 per barrel by the end of the year.

Statistics:

  • 54.30 cents per gallon: the 3-week low for the October 1995 gasoline contract.
  • 56 cents-57 cents per gallon: the average price range for gasoline on the NYMEX, compared to 54 cents-55 cents a month ago and 44 cents-45 cents a year ago.
  • 1 million barrels: the estimated volume of gasoline arriving in the New York Harbor area.
  • 51 cents: the price drop for the November 1995 crude oil contract.
  • $17.56 per barrel: the settlement price for the November 1995 crude oil contract.
  • 25 cents per barrel: the November/December crude spread on Nymex.
  • 62 cents: the October/November differential on Nymex.
  • 3 cents: the estimated price drop for RFG prices at New York Harbor.
  • 5 cents per gallon: the price increase for gasoline in the past month.
  • 3-week low: the timeframe for gasoline prices on the NYMEX.

Sources:

  • The New York Times
  • Reuters
  • ED&F Man Inc.
  • W.H. Brown & Co.
  • Sources familiar with the New York Harbor area.

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