Gasoline futures closed at a record high Friday as oil gained for the week


Gasoline futures surged to a record close Friday, providing a lift for crude oil that erased a weekly loss.

Price action
  • West Texas Intermediate crude for June delivery  CL00, +3.93% CLM22, +3.93% CL.1, +3.93% rose $4.36, or 4.1%, to finish at $110.49 barrel on the New York Mercantile Exchange, leaving it up 0.7% for the week.
  • July Brent crude  BRN00, -0.07% BRNN22, -0.07%,  the global benchmark, rose $4.10, or 3.8%, to settle at $111.55 a barrel, logging a 0.8% weekly gain.
  • June gasoline RBM22 rose 16.61 cents, or 4.4%, to close at $3.9578 a gallon, up more than 5% for the week. June heating oil HOM22 rose 0.1% to $3.9212 a gallon.
  • June natural gas  NGM22, -0.68%  rose 1% to finish at $7.663 per million British thermal units, 4.7% for the week.
Market drivers

“Gasoline is moving in the wrong direction for the consumer.  With just two weeks to go until the official beginning to Memorial Day Weekend summer driving season, the price of gasoline is an all time record at the pump, and the commodity is trading an all-time record,” said Robert Yawger, executive director of energy futures at Mizuho Securities, in a note.

“There has not been an increase in gasoline storage since March,” he noted. And while implied demand for gasoline has declined, it’s set to turnaround as summer arrives and is likely to challenge the record of 10.043 million barrels a day from July 2021.

The Energy Information Administration on Wednesday reported gasoline inventories dropped 3.6 million barrels versus a forecast for a 1.9 million barrel drop, while distillate stocks were down 900,000 barrels, compared with expectations for a 1.6 million barrel drop. The gasoline crack spread — the difference between the price of a barrel of oil and the products refined from it — hit a contract high above $55 a barrel during the session, Yawger said.

Oil futures see-sawed this week.

“There are two opposing forces dictating the markets stance in relation to oil; supply side concerns support the price of the barrel, with the ongoing war in Ukraine and the prospect of the European Union imposing a full ban on imports of Russian oil likely to cause a drop in availability amid an already tight market,” said Ricardo Evangelista, senior analyst at ActivTrades, in a note to clients.

“However, such price gains are capped by fears over the impact that inflation, and the slowing down of economic activity in China, due to the COVID related lockdowns, will have on demand,” said the analyst.

The market was also considering the possibility of Russia cutting off natural gas to Finland over the latter’s move toward joining NATO in the wake of the Russian invasion of Ukraine. On Friday, Turkey reportedly voiced objection to Finland or Sweden joining NATO.

As it fights to wean off Russian energy overall, the EU has been struggling to push through a proposed ban on Russia oil, with Hungary voicing objections over the potential damage to its own economy.

As for China, Shanghai is expected to reopen in a few days with its COVID-19 transmission subsiding, an official said Friday, according to the Associated Press. But that’s amid worries that Beijing will soon impose its own stricter lockdown. China is the world’s biggest importer of crude.

Oilfield services company Baker Hughes on Friday said the number of U.S. oil rigs rose by 6 this week to 563, while gas rigs were up 3 to 149 and miscellaneous rigs were unchanged at 2.

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