U.S. wholesale gasoline prices fell to their lowest levels since before Russia’s invasion of Ukraine on Wednesday, suggesting motorists in the world’s largest energy consumer will see lower pump prices in coming weeks.
U.S. gasoline futures fell as low as $2.5899 per gallon on Wednesday, the lowest since Feb. 18, just before Moscow invaded Ukraine, setting off a series of sanctions from the United States and its allies that boosted prices across the energy markets to multi-year highs.
Energy costs have been the primary driver of global inflation, with retail gasoline prices hitting an all-time record in the United States at more than $5 a gallon in mid-June.
Lack of spare refining capacity pushed costs for refined products higher, but headed into winter, gasoline prices have started to retreat as demand dips.
U.S. stocks of gasoline fell 1.17 million barrels, to 214.48 million, their lowest since November, according to data released on Wednesday by the Energy Information Administration.
“We’ve probably seen the highest refinery utilization rate and that’s going to keep sliding away as summer driving season ends and refiners head into maintenance season,” said Bob Yawger, director of energy futures at Mizuho Securities.
U.S. demand ticked higher in the most recent week, with product supplied climbing to 8.59 million bpd, though Yawger predicted gasoline demand likely will trend down.
Fears of a global recession and record amount of emergency oil sales from national reserves have helped cool crude oil futures as well as gasoline markets.
Wholesale gasoline futures, known as reformulated blendstock, peaked at $4.31 a gallon in early June. Retail U.S. gasoline prices hit a record of $5.016 two weeks later, according to American Automobile Association data.
Since then, the wholesale price has dropped by 37%, while retail prices are down 23%. Prices are down in every state, with the Midwest seeing some of the biggest declines.
Heating oil futures have remained elevated ahead of increased use of that fuel in the cold winter months.
BP’s (BP.L) Whiting, Indiana refinery is restarting after a few days offline following an emergency. Kilduff said that news also helped lower wholesale gasoline prices.