On May 7th we reported the beginning of the end of the spring gasoline price rally. After six weeks of gains on the NYMEX, and summer grade gas specification changes piling on more cost, retailers were unable to pass through daily wholesale price increases.
On May 16th RBOB traded an intraday high of $2.13 per gallon. Today June 3rd, RBOB is settling in the $1.73 per gallon range. A decrease of 20% in a little over two weeks. See the RBOB chart below.
While concerns about the global trade issues with China and Mexico and weaker global growth, news surely added to the downside price pressure, the fact is the market was overbought and ripe for correction.
Now it appears the market is oversold and we wouldn’t be surprised to see a bounce. There is plenty of bullish macro news out there but for the time being happy days are here again for your local gasoline retailer.
If you’re an end user and thought you missed the boat when prices were lower, now is an excellent time to review your budget and the forward pricing curve.