The latest data from the Energy Information Administration (EIA) showed that the national average cost for Regular gasoline in America edged higher by two cents to $2.24 per gallon over the past week. This is the 11th increase in the last thirteen weeks and a rebound of around 30 percent from the multi-year low of $1.72 per gallon hit in February. Regionally, the cheapest gas in the country can be found in Oklahoma, where a gallon of Regular costs just $1.99 on average. Residents of California again have to pay the most in the U.S. for Regular at $2.80 per gallon, with San Francisco also being the city with the nation’s highest average gas price ($2.95 per gallon).
The continued rise at the pump seen over the past few months is not surprising because a significant rebound in the price of oil has persisted during this same period. In fact, West Texas Intermediate (WTI) has surged from being down nearly 30 percent year-to-date in February to up roughly 30 percent YTD this week. Moreover, this roughly 81 percent rally off of the February lows is the largest uptrend on record for crude oil outside of the spike that followed the 1990 Iraq invasion of Kuwait. The sharp rebound in crude oil was initially driven by short-covering, i.e. weak hands forced to cover their bearish bets, but various supply disruptions have continued to push the price per barrel higher recently. Hedge funds, though, have cut their net long position in crude oil futures and options by around 88 million barrels (-13 percent) over the last two weeks, suggesting that some managers have been selling into this latest move higher. Regardless, many market participants expect oil price volatility to remain elevated for the foreseeable future.
Sources: U.S. EIA, DShort, GasBuddy, Bloomberg, Twitter, ZH, Goldman Sachs, Pension Partners, ReutersPost author: Charles Couch