Futures traded on the New York Mercantile Exchange, referred to as RBOB, closed Thursday at 427.62 cents a gallon, almost double where they were a year ago. Spiking fuel contracts in financial markets translate into higher costs at the pump for drivers just as the US enters peak travel season.
Americans took to the road over Memorial Day weekend, the traditional kickoff to the summer driving season, consuming 9.2 million barrels a day of gasoline in the process, the highest weekly number this year, data from the Energy Information Administration show. Meanwhile, gasoline inventories are at a multi-year seasonal low.
While high gasoline prices appear to be denting the pace of demand growth, consumption is still expected to increase over the summer.
“Prices are already at levels that should cause demand destruction,” said Amrita Sen, director of research at consultancy Energy Aspects Ltd., this week in Calgary. But pent-up demand and personal savings from the pandemic will continue to spur travel, she said.
High outright prices for wholesale gasoline have begun to draw exports from other markets. A flotilla of European gasoline is expected to arrive to the US East Coast, which will serve to shore up regional stockpiles that are the emptiest they have been in more than a decade.
The gasoline surge is also showing up at the pump for consumers. The latest data showed average US pump prices are at $4.986 a gallon, according to the American Automobile Association.