FX.co ★ Gasoline Tests 4-Year Low

In early October, US gasoline futures dipped below $1.90 per barrel, reaching their lowest point in over four-and-a-half years. This decline is attributed to a combination of abundant crude oil supply and concerns over the demand for refined fuel. Petroleum-based commodities have significantly decreased in value, spurred by reports suggesting that OPEC+ nations are planning to advance their upcoming production increases. These hikes would add to a sequence of output increases seen earlier this year, potentially exacerbating an already oversupplied market, as the cartel seeks to regain market share lost during the Covid-induced energy price shock. Simultaneously, a bleak demand outlook has intensified the downward pressure on gasoline prices. The ISM Manufacturing PMI indicated a continued contraction, while the conclusion of the summer driving season reduced gasoline crack spreads to their lowest levels since March. Further compounding the situation, the latest data from the Energy Information Administration (EIA) revealed that the amount of motor gasoline supplied fell by 440,000 barrels from the previous week to 8.5 million barrels for the week ending September 26th.