March WEX Fuel Index

Retail gasoline prices are in the midst of the annual spring rally as US prices have climbed by some 30 cents per gallon from March 1 to April 1.

Transitions from winter grade to summer grade gasoline around the country have taken hold at the wholesale level. Price rallies at this time of year are not uncommon, but even with a 30 cents plus monthly increase for retail gasoline averages, the average price on April 6, 2016 of $2.04 per gallon is still some 34 cents per gallon lower than a year ago.

Gasoline inventories are still on solid footing, but with the refinery maintenance still in full swing there are always concerns about supply especially as the transition can always be a bit tricky. In 2015, retail gasoline prices peaked in mid-June at $2.80 per gallon. While a similar time frame for a peak in 2016 seems likely the absolute price peak is expected to be about 25-30 cents lower than a year ago.

The reason for a temperate spring price rally lies largely in the fact that crude oil prices remain low. Although March at times saw fuel prices top $40 a barrel for WTI futures, prices are in the upper $30s in early April. WTI futures through the remainder of the year do not reach $42 a barrel.

Diesel supplies remain bloated in the country and there are legitimate diesel demand concerns going forward and as a result expectations are for gasoline prices to surpass diesel very soon. As of this publication, diesel on the street is only a nickel more than gasoline.