Rangsarit Chaiyakun/iStock via Getty Images
Gasoline prices in the US have increased 12% in the last month to an average of $3.51/gal as of January 28, according to AAA, threatening the Federal Reserve’s fight against inflation and potentially extending last year’s big rally in refinery stocks.
Although winter storms in December contributed to tighter supply, mild January weather may have prompted more drivers to get behind the wheel, pushing up pump prices, AAA said, adding that the cost of oil has risen. seen driven by market optimism that global demand for oil will be stronger. than expected in 2023 due to the reopening of China’s economy.
In an “unusual seasonal pattern,” gasoline prices have risen throughout January, Bespoke Investment Group said this week. “While prices have historically risen an average of less than 1%” YTD through Jan. 26, “this year the rise has been 9.16%.”
Gasoline exports have roughly doubled from a year ago, and China’s reopening means more people are using fuel.
Diesel is climbing towards 2022 highs again, with crack spreads reaching over $60/bbl last week, from $50/bbl in November and $25/bbl a year ago; diesel could rise further as Europe bans Russian oil products from February 5.
Companies have been taking more refineries offline for maintenance in recent weeks; with less fuel being shipped to market, prices are rising.
“We see Tailwinds are growing again for US refiners.believes Bank of America analyst Doug Leggate, favoring Valero Energy (VLO), PBF Energy (PBF) and Marathon Petroleum (MPC).
ETFs: (NYSEARCA:USE), (NYSEARCA:UGA), (NYSEARCA:CRAK)
Valero (VLO) was the first of the major refiners to report fourth-quarter earnings this week, easily beating Wall Street estimates.
