The Squeeze is On

Author: Pam Corn   Date:

The thinly traded holiday gasoline market bottomed out on December 24th with a NYMEX low of $1.2352 per gallon. Here we are a few days into the New Year trading at a high of $1.4146. Here’s what happened to push prices higher.

  • OPEC PRODUCTION CUTS took effect January 1st. Bloomberg reported Saudi crude exports declined to 7.253 million barrels a day in December, from 7.717 million in November.
  • OPTIMISM SURROUNDS US CHINA TALKS – Economic data shows a slowing Chinese economy and raises hopes we will get a trade deal done.  
  • ECONOMIC INDICATORS SAY ECONOMY IS NOT AS BAD AS REPORTED – Bullish jobs report.

Let’s look at how this effects your local distributor living rack to retail every day. Using Oil Price Information Service (OPIS) for Harrisburg, PA gasoline as an example.

  • December 26, 2018 the low unleaded branded price was $1.2995 per gallon
  • January 1, 2019 the low unleaded branded price was 1.3640 per gallon
  • January 9, 2019 the low unleaded branded price was 1.4100 per gallon

In a few short days, assuming you can buy at the low daily price, your cost has moved 0.1105 cents per gallon. If today’s market holds, we will see more price increases tonight into tomorrow. In the meantime, retail prices are moving in the opposite direction, trending lower lagging the daily wholesale increases. Retailers hurt the most in an up market cycle because no one wants to be the first to raise prices. This price cycle looks like it could continue into late winter and then just in time for the price ramp up to summer grade products which start trading in March.  

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As Director of Marketing for Guttman Holdings, I lead our advertising, digital marketing, branding, and public relations strategies, and share my expertise to communicate key messaging to all our stakeholders. With my diversified leadership background, I also drive innovation and cutting-edge business practice and results, to generate interest in Guttman Energy, Guttman Renewables, and Source One service offerings.

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