U.S. Gasoline Futures Hit Lowest Levels Since December 2021

By Shariq Khan

NEW YORK (Reuters) – U.S. gasoline futures fell nearly 6% on Tuesday to their lowest since December 2021, as the end of the driving season impacted demand for motor fuel amid a broader sell-off in the oil market.

Gasoline futures for October deliveries settled 5.5% lower at $1.98 per gallon, marking their largest single-day loss since July 2022.

The motor fuel was the biggest decliner in the energy market sell-off on Tuesday, influenced by the conclusion of the summer driving season in the United States and ample inventories, according to Rabobank strategist Joe DeLaura.

Labor Day, celebrated on the first Monday of September, is traditionally viewed as the end of the U.S. summer driving season.

Simultaneously, U.S. crude oil futures dropped 4.4% to $70.34 a barrel, the lowest settlement since December 2023. Resolutions of disputes causing reduced Libyan oil output and exports have eased supply constraints, while disappointing manufacturing data from China revived fears of weak demand in the world’s largest oil-importing nation.

Gasbuddy analyst Patrick De Haan noted that this sharp decline in oil prices could lead retail gasoline costs to reach their lowest since 2021 by the end of October. Crude oil remains the most significant factor in determining gasoline prices at the pump, according to the U.S. Energy Information Administration.

At the U.S. Gulf Coast refining hub, gasoline was trading close to under $2 a barrel, with technical factors indicating potential further declines, as noted by fuel distributor TACenergy.

“The driving season has ended, and energy markets are starting September with a significant drop in gasoline prices,” they commented.

Gasoline futures for immediate delivery are now at their weakest premium over the subsequent contract since June, prompting traders to consider storing more products rather than selling at these lower prices.

As of August 23, U.S. gasoline stockpiles increased to 218.4 million barrels, marking a 0.5% rise from the previous year.