Gasoline Prices Across The US Are Hovering Near 7 Month Lows This Morning

Gasoline prices across the US are hovering near 7 month lows this morning, while diesel prices are trading at 3 month highs. The extreme divergence between products this week appears to be a reflection that the driving season is winding down, while much of the world is wondering how they’ll heat their homes this winter.

Oil prices are seeing modest gains as OPEC’s president indicated the cartel is open to the Saudi suggestion of cutting output to put a floor under prices, although the gains remain tempered by the potential for new supply coming online, particularly from Iran. 

Yesterday’s DOE report added to the bearish gasoline, bullish diesel dichotomy with a huge drop in demand for gasoline, while distillate days of supply continue to sit at critically low levels. In 4 out of the past 7 weeks the DOE’s implied demand estimate for gasoline has fallen below 2020 levels, when the country was largely still on lockdown. Demand for diesel in the US is holding near average levels, and production is holding strong with refining margins still elevated, but strong exports are continuing to keep domestic stockpiles at low levels. 

US crude oil exports are also holding near record highs, which is also keeping domestic stockpiles at low levels despite the ongoing release of barrels from the SPR of roughly 1 million barrels every day. Even though the US has become the world’s favorite exporter of energy supplies this year, domestic refiners are still dependent on imports of oil to optimize their output, and have a new option from Mexico to help replace the barrels they used to buy from Russia. 

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