Lundberg in CSPdailynews.com

 
CSP, October 7, 2018:
Refiner Gasoline Margins Tight
Pump prices jump 7 cents, may climb more

CSP, September 24, 2018:
A Month of Pump-Price Stability
But downstream shorted both gasoline margin and demand growth

CSP, September 10 2018:
Transfer of (a Little) Wealth
Refiners hand retailers 2 cents per gallon

CSP, August 27, 2018:
Whipsawed Retail Gasoline Margin Slips Again
On the bridge of seasons, a hunkering down for station operators?

CSP, August 13, 2018:
Retailers Gain, Refiners Lose
Pump price bumps up, but the trend is probably over

CSP, July 30, 2018:
Gasoline Retailers Between 'Rock and a Hard Place'
Margin is squeezed and demand is soft


 
CSP, October 7, 2018:
Refiner Gasoline Margins Tight
Pump prices jump 7 cents, may climb more

CAMARILLO, Calif. -- The Oct. 5 national average retail price of regular grade gasoline jumped 6.75 cents per gallon (CPG) between Sept. 21 and Oct. 5, according to the most recent Lundberg Survey of U.S. fuel markets. During the same two weeks, refiner gasoline margin was slashed by nearly a nickel per gallon equivalent, while retail gasoline margin regained just a little.

It is crude oil calling the shots on gasoline prices and margins. A price proxy for the global raw resource climbed by more than a 10-CPG equivalent in the past two weeks; West Texas Intermediate alone rose 8.5 CPG since Sept. 21. WTI reached a peak $76.41 a barrel on Oct. 3, then retreated about $2, but refiners are still hurting as they failed to pass through the price hikes they received. Some time soon there will have to be some rise in refining margin on gasoline.

Lundberg weighted wholesale gasoline price gained less than 6 CPG over the two weeks, but the pump price rose by nearly 7 cents. U.S. average retail margin on regular grade expanded by less than one penny. It stands at 18.51 cents on Oct. 5.

Even if oil prices do not strengthen further short term, a few more cents at the retail pump is likely this month because refiners are hard-pressed to complete the passthrough of oil price hikes already received.

The refining sector has entered its seasonal maintenance period, but utilization of total U.S. capacity remains above 90%.

Gasoline demand growth, showing signs of life but by no means healthy, may eke out a mere half of one percentage point in 2018. So far this year there has been enough price resistance to keep both downstream margins in struggle mode.

Two examples of how price and margin behaved in the two latest snapshots, Oct. 5 and Sept. 21: In the greater metro Los Angeles market, the regular-grade margin is 20.44 CPG on Oct. 5, too skinny for this generally very high-cost market and state but 1.38 CPG healthier than it was two weeks ago. In greater Los Angeles, the all-channels weighted wholesale price leaped 17.64 cents to $2.83 over the two weeks and the pump price swelled 19.86 cents. While national gasoline demand has failed to excite so far this year, in California of late it is ugly. (Taxes inside the retail gasoline price in this market average 78.71 cents.)

Then there's Houston: The average retail regular grade at the pumps is $2.5773, up just 3.73 cents since Sept. 21 but retailers were paying 9.5 CPG more on average, so their average margin caved by 5.77 cents to an unsustainably low 7.06 CPG. (Taxes on gasoline total 38.48 cents here.)

Los Angeles and Houston are, on Oct. 5, the highest and lowest average retail prices within the Lundberg panel of cities across the country. Neither of them is hosting gasoline retailer gaiety.

Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries. Click here for previous Lundberg Survey reports in CSP Daily News.


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