US gasoline futures experienced a rally, with October RBOB futures increasing by 0.86% to $3.1621 per gallon. This surge comes as the national average retail price for gasoline climbed above $4.12 per gallon, according to AAA data. The retail price is up 2.49 cents from the previous day and a significant 93.34 cents higher than the same time last year, marking a 29.3% year-over-year increase. This rise is attributed to ongoing supply concerns, as inventories remain significantly below year-ago levels.
Inventories of US motor gasoline fell by 2.536 million barrels to 206.842 million barrels in the week ending August 21, according to the Energy Information Administration (EIA). This level is 7.0% lower than a year ago, leaving limited buffer heading into the seasonal refinery maintenance period. While refineries processed 17.393 million barrels of crude per day, a 3.0% increase from a year earlier, gasoline stocks still declined. Demand, as measured by finished gasoline supplied, averaged 8.932 million barrels per day over the past four weeks, a 1.1% decrease compared to the same period last year, although weekly data showed a 4.1% increase in delivered volume to 9.043 million barrels per day compared to the prior week.
The substantial gap between retail prices and futures contracts, nearly 96 cents, is not indicative of pure refiner profitability. Instead, it reflects various factors such as federal and state taxes (18.4 cents per gallon federally, and an average of 33.55 cents in state taxes and fees), ethanol blending costs, distribution expenses, retail margins, and regional basis variations. The market is closely watching the EIA's weekly petroleum status report, as an unexpected increase in inventories could temper recent gains, while refinery disruptions or supply interruptions could further elevate wholesale prices. President Trump has also pressured refiners to boost production to ease pump prices, while refiners argue that federal biofuel-blending quotas increase costs.
