Over the past few months, there has been a lot of negativity in the global fuels market. The price war between Russia and Saudi Arabia, as well as the COVID-19 pandemic are at the top of the list when it comes to driving crude oil prices to historic lows. However, recently there has been some small and simple actions that show signs of turnaround in a positive direction in the crude market. The Texas Railroad commission, production cuts, relaxing of local travel restrictions, and construction resuming, will all have a positive influence on the oil market.
As the summer driving season shifts into high gear, consumers are well aware of gasoline prices and the impact the price will have on their summer travels. Although gasoline makes up 90% of the gallons we purchase for our vehicles, the product that makes up the additional 10% (Ethanol) can have a big impact on the price we pay.
On May 22nd we were hoping for a market correction prior to the holiday weekend. On that day the front month NYMEX RBOB contract settled at $2.2636. Climbing from May 2nd, close @ $2.0803. A whooping $0.18 price move inflicting severe pain on your local gas station distributor leaving retail gasoline margins negative in some markets and begging the question, who wants to blink first and raise prices?