On September 17th I wrote about “Relief at the Pumps,” talking about lower gas prices are on the way. Since then retail gas prices have moved higher. In Pittsburgh, PA 87 grade Unleaded gasoline prices are now averaging $3.15 per gallon with a high of $3.239.
Due to the seasonality of our business we typically see declining prices into fall and winter culminating with the lowest prices of the year. Why have prices bucked the seasonality trend?
On September 17th the front month NYMEX RBOB contract closed at $1.9646 per gallon. The market started to trend higher on the uncertainty surrounding Iranian sanctions and the loss of OPEC’s second largest producer.
On September 24th after the OPEC/non-OPEC meeting, Saudi Arabia Minister of Energy, Khalid Al Falih stated OPEC production won’t be increased. Leading to the prospect of a severe tightening of global supply.
On October 3rd the market topped out at $2.1500 before closing at $2.1378 per gallon. A $0.17 move up in two weeks before finally starting a multi cent price correction starting October 4th.
See the chart below.