Gasoline stocks plummet, prices climb with peak demand season around the corner

• Gasoline inventories dropped 6.08 million barrels last week and are now nearly 3% below the five-year average, moving in the 'wrong direction' as summer demand approaches
• Oil prices climbed above $100 per barrel, with Brent crude at $118.34 and U.S. crude at $106.35, while gasoline futures jumped 5% to their highest since 2022
• Major refinery outages at BP's 440,000 bpd Whiting facility and Shell's 250,000 bpd Norco plant are expected to push Midwest prices above $5 per gallon

Gasoline Stocks Plummet, Prices Climb Ahead of Summer Driving Season

U.S. gasoline prices are surging to four-year highs as stockpiles decline sharply ahead of peak summer demand, driven by geopolitical tensions and record crude exports.

Key Developments

U.S. gasoline inventories fell by 6.08 million barrels last week, pushing stocks to 5.98 million barrels (nearly 3%) below the five-year average, according to EIA data. This drawdown comes as global supply disruptions from the U.S.-Israel-Iran conflict and the effective closure of the Strait of Hormuz force countries to rely on American energy supplies. U.S. crude exports hit a record high last week.

Price Impact

• National average retail gasoline: $4.229/gallon (highest since July 2022)
• Gasoline futures: $3.7423/gallon, up 5% (highest since 2022)
• Brent crude: $118.34/barrel, up $7.08
• U.S. crude: $106.35/barrel, up $6.42

Both oil benchmarks are trading above $100/barrel.

Supply Constraints

Refinery utilization remained steady at just under 90%, but major outages are exacerbating supply issues:

• BP's Whiting refinery (440,000 bpd): power outage on Sunday
• Shell's Norco refinery (250,000 bpd): fire on Tuesday

Midwest prices are expected to exceed $5/gallon due to the Whiting outage.

Market Outlook

Analysts warn the timing is critical, as stockpiles typically build before summer driving season. Bob Yawger of Mizuho stated this situation is "getting ugly fast." BOK Financial's Dennis Kissler noted demand destruction hasn't materialized yet but typically occurs 1-2 months after sustained high prices, suggesting further upward pressure on gasoline costs in coming weeks.