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Easing US Pump Prices Draw More Drivers to the Road, for Now


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(Bloomberg) Bullish gasoline futures could curtail the relief drivers are feeling at the pump — just as Americans are finally hitting the road after an unusually slow summer.Gasoline futures in New York shifted into the most bullish structure in nearly five years on Wednesday, threatening to slow a recent decline in pump prices. The move comes after weekly gasoline demand jumped by 8.5% last week, snapping several weeks of below-pandemic-level consumption.

The market’s backwardation — when prompt deliveries are are priced higher than future ones — widened to 27.52 cents a gallon at settlement Wednesday, the most since 2017. While it’s not unusual for the August contract to fetch hefty premiums over the off-peak September contract, the pop in weekly demand could be a driving factor.

The four-week average has returned to seasonal rising trend, at least for a week

Average prices at the pump have fallen for the past 43 days, mirroring similar weakness in oil, the main contributor to gasoline costs. But they’re still 36% higher than at the same time last year, according to AAA data.

GLJ
GLJ

In any case, the weekly demand uptick isn’t likely to sustain a significant demand recovery, said Andy Lipow, president of Lipow Oil Associates in Houston. “The combination of higher gasoline, food, utility and rent costs is putting a crimp on household budgets and [gasoline] demand continues to decline compared to previous years,” he said.



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