Gasoline futures are behaving, according to Goldman Sachs, as if the US economy is headed toward a recession. Gasoline futures are .01 and a quarter-cent today currently trading at $1.2333 per gallon at the New York Mercantile Exchange.
An analyst at the banking/investment firm notes that deferred gasoline futures of the summer months are currently trading less than $20 per barrel higher than crude oil meaning, if this were last trading day of those contracts, then the premiums are the smallest in the past six years when the unemployment rate was higher than 9%. The analyst notes this is quite a deviation from last year when gasoline premiums fluctuated between $23 to $33 a barrel above crude oil prices.
“We’re entering the time of year when gasoline refineries are conducting maintenance and cutting back output because of the low demand driving season, but if we slip into a recession (as predicted), then demand might remain constant at best,” said Barb Levy, chief director for The Fox Group’s futures division in Chicago, sharing her fundamental assessment of the gasoline futures market. Levy added, “Currently economists reportedly give a 15% to 20% chance of a US recession happening.”
Gasoline futures trend is down with no bottom yet in sight. Gasoline futures low is about $1.12 per gallon wholesale without the ethanol blend, but how long the favorable consumer prices will last before the driving season kicks into gear is anybody’s guess.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.