Gasoline Prices Hit New Multi Year Lows Amid Inventory Glut

Oversupply Conditions

US gasoline inventories continue to swell, confirming the market's oversupply. Refineries are running at high utilization rates, focusing on producing more profitable distillates, but the resulting gasoline byproduct is exceeding low winter demand. This inventory glut is putting immense pressure on wholesale prices.

Weak Crude Provides Headwind

The declining price of crude oil is compounding the weakness in gasoline. Lower feedstock costs allow refiners to reduce product prices without totally sacrificing margins, maintaining the downward trajectory of gasoline futures. The bearish outlook is expected to hold through the first quarter.

Consumer Relief

The continuing decline translates directly into relief for consumers at the pump. Analysts project retail prices will track the wholesale slump. The next major change in direction is likely to be tied to the spring refinery maintenance season or a sharp, unexpected rally in crude oil.