Falling US gasoline stocks signal a repeat last summer’s high prices

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    March 22, 2012 (Reuters) – U.S. motorists will face a repeat last summer’s high gasoline price, analysts warned Wednesday. Fuel stockpiles are heading towards multi-year lows before the peak summer driving season, which begins in two months.

    Retail gasoline prices are now at an average of $3.44 per gallon in the United States. This record was set last June when crude oil prices rose on Russia’s invasion and the waning COVID-19 travel restrictions. This resulted in pent-up travel demand.

    The year began 5.6% earlier than last year. This resulted in a drop of gasoline stocks for five consecutive weeks.

    According to weekly government data, inventories were at 229.6 millions barrels last week, which was their lowest level since 2015.

    U.S. gasoline futures rose about 2% to $2.59 per gallon after Wednesday’s data. So far this month, the contract averaged $2.61 compared to a five-year average of $2.01 through 2022.

    Robert Yawger, director for energy futures at Mizuho, stated that “we are in danger of going under 200 million barrels gasoline storage for the very first time in many decades.”

    Yawger said that rising travel and declining inventories could boost retail prices this year. Last summer’s $5 per gallon price is still possible.

    John Kilduff, a Again Capital energy trading and commodities expert, said that if refining margins keep rising, “it will put upward pressure on refined products prices particularly on gasoline.”

    This is partly due to the fact that U.S. refiners have entered deep into spring maintenance, which has reduced processing capability following last year’s winter storm shut-downs.

    Brayton Tom, regional director of energy at StoneX, stated that many refiners have made diesel more important than gasoline to meet European demand.

    The U.S.’s refineries are now operating at 86% of their capacity, a drop from 89% a previous year. However, a major Exxon Mobil Corp. (XOM.N), refinery expansion could change the situation. It will be fully operational by the end of this month and can process 250,000 more barrels of crude oil daily into gasoline or diesel.

    Reporting by Shariq Khan, Bengaluru
    Editing by Marguerita Chuy

    Our Standards: The Thomson Reuters Trust Principles.

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