US Gasoline Futures Drop to 2021 Lows
US gasoline futures fell sharply on Tuesday, marking a significant decline. Prices dropped nearly 6%, reaching their lowest level since December 2021. This decline was attributed to the end of the driving season, which has dampened demand for motor fuel. The sell-off in the broader oil market also contributed to the downward trend.
Gasoline Prices Hit Hard by Seasonal Shift
US Gasoline futures for October delivery settled 5.5% lower at $1.98 per gallon. This was the steepest one-day loss since July 2022. The end of the summer driving season in the U.S. was a key factor. According to Joe DeLaura, a strategist at Rabobank, ample inventories and lower seasonal demand put additional pressure on prices. The Labor Day holiday, celebrated on the first Monday of September, traditionally marks the end of the summer driving season in the U.S.
Broader Energy Market Sell-Off
The decline in gasoline was the most significant among energy markets on Tuesday. U.S. crude oil futures also fell, dropping 4.4% to $70.34 a barrel. This was their lowest settlement since December 2023. Several factors contributed to the sell-off. First, the resolution of disputes in Libya led to increased oil output and exports, easing previous supply constraints. Second, weak manufacturing data from China reignited fears of sluggish demand in the world’s top oil-importing nation.
Outlook for Retail Gasoline Prices
Analysts suggest the sharp decline in oil prices could lead to lower retail gasoline prices by the end of October. GasBuddy analyst Patrick De Haan noted on social media that prices could reach their lowest levels since 2021. The U.S. Energy Information Administration highlighted that crude oil prices are the largest component of gasoline costs at the pump. As crude prices fall, retail gasoline prices often follow.
Technical Indicators Suggest Further Declines in US Gasoline Futures
At the U.S. Gulf Coast refining hub, gasoline was trading close to $2 a barrel. Technical factors suggest there could be more downside ahead. TACenergy, a fuel distributor, mentioned in a note that market conditions are favoring further price declines. “The driving season has ended, and energy markets are starting September with a significant sell-off in gasoline prices,” they noted.
Market Dynamics Shift as Traders Adjust
The futures market also reflected shifting dynamics. Gasoline futures for immediate delivery reached their lowest premium over the next contract since June. This pricing structure signals that traders may store more gasoline rather than sell it at low prices.
US Gasoline Futures Dip – Stockpiles Remain Steady
US gasoline stockpiles were reported at 218.4 million barrels as of August 23. This level is 0.5% higher than the same period last year, suggesting that supply remains robust. With ample inventories and reduced seasonal demand, gasoline prices are likely to face continued pressure in the coming weeks.
As the market adjusts to the post-summer reality, traders and analysts will be closely watching for any signs of demand recovery or further declines. The end of the driving season has clearly marked a turning point for US gasoline futures, with prices poised to remain under pressure as supply outstrips demand.
