By Brian L. Milne, Energy Editor, Schneider Electric
The upside push in wholesale gasoline costs slowed in early March, with supplier offers at the terminal known as rack postings shallowly mixed at major metropolitan markets across the U.S. The mixed offers follow an increase by the U.S. retail gasoline price average to a $3.479 gallon better-than five-month high on Mar. 3, as reported by the Energy Information Administration (EIA).
EIA’s U.S. average has so far increased for four consecutive weeks from a $3.292 gallon low for 2014, gaining 18.7 cents or 5.7% since Feb. 3. In 2013 at this time, EIA’s average had already peaked at $3.784 gallon on Feb. 25, and had then declined for nine consecutive weeks to early May.
We shouldn’t expect a repeat of that pattern this year, with a peak in the average expected in May. In 2012, the EIA’s U.S. average gasoline price peaked in early April and in early May for 2011.
The forward curve for gasoline shows a market in “backwardation” although the calendar spreads are tight, suggesting supply is more than adequate to handle increasing demand as driving picks up in spring and summer.
Ending February with 229 million barrels of supply, U.S. gasoline stocks are 1.0% above the comparable year-ago period and the five-year average.
New York Mercantile Exchange WTI crude oil futures are holding above $100 bbl, but are under pressure as market participants question the strength of the global economy considering key data points continue to show mixed findings.
In beginning the second week of March, a steep drop in Chinese exports reignited this worry, erasing positive sentiment for the bullish case achieved Mar. 7 after the U.S. Department of Labor reported 175,000 new jobs were added to the U.S. economy in February while revising higher new job gains for January and December.
This beat market estimates, and suggested the US economy remained on a strong growth trajectory in 2014 despite a slow start blamed on harsh winter weather.
About the Author
Brian L. Milne is the Energy Editor for Schneider Electric—a global specialist in energy management. Milne has been focused on the energy industry for 18 years as an analyst, journalist and editor. He can be reached at [email protected]