© Reuters. FILE PHOTO: Gasoline costs are displayed at an Exxon fuel station behind American flag in Edgewater, New Jersey, U.S., June 14, 2022. REUTERS/Mike Segar/File Photograph
By Shariq Khan
(Reuters) – U.S. motorists face a repeat of final summer time’s excessive gasoline costs, analysts warned on Wednesday, with gasoline stockpiles heading in direction of multi-year lows forward of the height summer time driving season that begins in two months.
Retail gasoline costs, now averaging $3.44 a gallon nationwide, hit a document $5.02 a gallon final June as costs jumped on Russia’s invasion of Ukraine and the waning of COVID-19 journey curbs unleashed pent up journey demand.
Car journey within the U.S. began the 12 months 5.6% increased than final 12 months, resulting in a drop in gasoline stockpiles for 5 straight weeks.
Final week’s 6 million-barrel drawdown was the most important since September 2021, leaving inventories at 229.6 million barrels, their lowest for this time of the 12 months since 2015, in keeping with weekly authorities information.
After Wednesday’s information, U.S. gasoline futures climbed about 2% to $2.59 a gallon and up to now this month, the contract has averaged $2.61, in contrast with a five-year March common of $2.01 by 2022.
“We’re at risk of going beneath 200 million barrels of gasoline storage for the primary time in a few years,” mentioned Robert Yawger, director of power futures at Mizuho.
Rising journey coupled with declining inventories might raise retail costs once more this 12 months, mentioned Yawger, with final summer time’s $5 a gallon a chance once more.
If refining margins proceed their current rise, “it’s going to put upward stress on the refined merchandise costs, significantly on gasoline,” mentioned John Kilduff, an power buying and selling and commodities knowledgeable at Once more Capital.
The surge is partly as a result of U.S. refiners are deep into spring upkeep, which has lowered processing capability following winter storm shut-downs on the finish of final 12 months.
Many refiners have additionally prioritized making diesel over gasoline to fulfill demand from Europe, the place sanctions on Moscow and strikes in France have restricted distillate flows into the area, mentioned Brayton Tom, regional director for power at monetary providers agency StoneX.
U.S. refineries are working at 86% of capability, down from 89% a 12 months in the past. However a significant Exxon Mobil Corp (NYSE:) refinery enlargement might flip the script. When absolutely working this month, will probably be in a position to course of 250,000 further barrels of crude day by day into gasoline and diesel.
