Gasoline’s biggest springtime rally in more than a decade may be ending before U.S. motorists start hitting the road as vacation season begins and demand peaks.
Gasoline futures will average $1.40 a gallon during the summer, a 17 percent decline from May 15, according to surveys of five analysts by Bloomberg. Refiners are finishing seasonal shutdowns to increase production just as the global recession reduces oil demand by the most since 1981 and U.S. imports rise.
Bets that gasoline will fall below $1.40 by May 26 have risen almost 10-fold in a month on the New York Mercantile Exchange. While a drop would hurt profits at Valero Energy Corp. and ConocoPhillips, the two biggest U.S. refiners, it would do little to help consumers. The Energy Department forecasts pump prices of $2.21 a gallon on average this summer, little changed from today.
“We’re in the final throes of the spring gasoline rally,” said Tom Knight, the trading director at Truman Arnold Cos., a distributor in Texarkana, Texas that sells almost 100 million gallons of oil products a month to the government, industrial users and retailers. “With refiners coming out of maintenance, we’ll see refinery runs and production continue to inch higher.”>>>MORE