July gasoline swoon underway.
Energy markets in general have been under pressure since the beginning of July with gasoline seeing the biggest downdrafts.
Post Fourth of July price drops should start to pick up steam as gasoline futures and physical markets see some of the lowest prices in nearly three months.
July started with inventories on strong footing even as demand appears to be on pace to break the record levels from 2007. The glut of crude oil that was talked about in the 1st quarter is arguably becoming a glut of gasoline to start the 3rd quarter. Even with already comfortable supplies, refiners have been producing gasoline at a high rate.
Oil prices have also been under pressure in the first few days of July. After spending some time above $50 per barrel, and in the general vicinity of $50 WTI, prices are below $47 per barrel and Brent is only about 50 cents better. Currently there is not a WTI contact better than $50 per barrel until March 2017. With refiners operating at a high rate, demand for crude oil is expected to remain strong. However, some of the global outages that helped support prices in the spring are being sorted out which should bring more oil to the global markets.
Retail gasoline prices are already more than 10 cents below the 2016 highs as current US prices average $2.264 per gallon. In the first week of July, there were roughly 20,000 retail outlets with prices below $2 per gallon and there will be more to follow. Diesel has been surprisingly resilient this summer as the wholesale futures prices are a couple of pennies higher than wholesale futures gas price, a rarity at this time of year.