NEW YORK (Reuters) – U.S. gasoline prices tumbled in Monday’s energy market selloff, as worries about weak demand for fuel returned as the threat of Tropical Storm Beta waned, market analysts said.
RBOB gasoline futures on the New York Mercantile Exchange <RBc1> fell more than 5% to a session low of $1.161 per gallon, ending a five-day streak of gains. Prices followed crude and equities markets lower, reversing last week’s gains built on the active storm season in the U.S. Gulf Coast.
Nationally, gasoline prices at the pump averaged $2.18 a gallon on Monday, 18% lower than the same time last year, American Automobile Association data showed.
Beta is the third named storm in the U.S. Gulf of Mexico in less than a month, following Hurricanes Laura and Sally which affected crude and fuel production and roiled the markets.
But with the storm threat subsiding, traders were more focused on weakening demand because of the coronavirus pandemic as the summer driving season fades in the rearview mirror.
Gasoline product supplied, a proxy for demand, reached a five-month high in August at 9.2 million barrels per day, but has since decreased to 8.5 million bpd, U.S. Energy Information Administration data shows, still roughly 9% below year-ago levels.
“We’ve got a number of different factors at play – remote work, schools closed – which should in theory weigh further,” said Matthew Smith, director of commodity research at ClipperData.
The autumn months were already expected to be re-shaped by the pandemic. In an effort to save cash, fewer refiners are due to shut during the autumn maintenance season.
That will not help refining margins weighed down by an oversupplied distillate market. Margins are hovering just above $9 a barrel <CL321-1=R>.
U.S. heating oil futures <HOc1> were down nearly 5% on Monday.
Analysts are not optimistic about a swift recovery for the products market. GasBuddy, a company that advises on gasoline and driving trends, just turned to a permanent work-from-home structure in Chicago.
“Even after a vaccine, it will take a long time to distance ourselves from this pandemic period,” said Patrick De Haan with GasBuddy.
(Reporting by Stephanie Kelly; Editing by Marguerita Choy)