The latest data from the U.S. Energy Information Administration (EIA) showed that the average cost for Regular gasoline in America rose fractionally during the past week to $2.52 per gallon. That was the third weekly increase in a row and the highest reading since November. Regionally, the cheapest gas in the country can be found in Oklahoma, where a gallon of Regular costs just $2.22 on average. Residents of California as usual have to pay the most in the continental U.S. for Regular ($3.18/gallon), and San Francisco remains the city with the nation’s highest average cost ($3.27/gallon).
The price at the pump has rebounded over the past few weeks due in part to the continued upward pressure on oil. In fact, the cost for a barrel of West Texas Intermediate (WTI) crude has jumped by more than 10 percent over the last month and a half to a 3-year high. Some of the recent runup, though, was likely exacerbated by short-covering, i.e. bears being forced to cover (buy) because of rising prices, with hedge funds’ net short position now back to the lowest level since 2014. However, the ratio of professional money managers’ long to short positions in the broader petroleum space (Brent, WTI, gasoline, and heating oil combined) has lifted to a record high in January. All of this suggests that energy-sector volatility could remain elevated in the near-term. If the bias is towards the upside and the cost of gasoline continues to rise, it could prove to be a drag on consumer spending, especially since cheaper gasoline has not been able to provide a significant boost to retail sales.
Sources: U.S. EIA, GasBuddy, U.S. CFTC, Reuters
Post author: Charles CouchDisclosures