U.S. gasoline futures fell about 3% on Wednesday, cutting their premium over crude oil to its lowest level since November 2023, after government data showed weaker demand on a four-week- average basis.
WHY IT MATTERS
The U.S. consumes the most gasoline in the world, and demand for the motor fuel is typically the highest from April through September, considered the summer driving season in the country.
Weaker margins on motor fuels could force refiners to lower output by processing fewer barrels of oil. That would weigh on oil demand, and if fuel consumption rises suddenly the loss of supply could cause a surge in prices at the pumps.
“We are zig-zagging between decent numbers and bad demand prints,” Rabobank strategist Joe DeLaura said. He added that the upcoming refinery maintenance season, which usually begins around mid-September, is likely to be more extensive than normal due to the weak margins.
BY THE NUMBERS
Gasoline futures were last down about 2.8% to $2.19 per gallon. Their premium over West Texas Intermediate crude oil futures, or the crack spread, shrank to as low as $13.32 per barrel – the weakest since Nov. 7, 2023.
Gasoline demand on a four-week average basis fell to 9.11 million barrels per day in the week ended Aug. 16, from 9.18 million barrels in the week before that, according to data from the U.S. Energy Information Administration.
(Reporting by Shariq Khan in New York Editing by Matthew Lewis)