Gasoline Futures Track Oil Higher

Gasoline futures for delivery at the New York Harbor rose to over $2.0 per gallon in February, testing the highest level in five months as higher risk premiums for crude oil shipments lifted the costs of feedstock for refineries. Tensions between the US and Iran culminated in reports that the US could intervene militarily as soon as next week, with Israeli officials calling for a regime change in Tehran. The moves risked Iran's possible blockade in the Strait of Hormuz, a chokepoint for nearly one third of global tanker traffic. In the meantime, Ukrainian strikes in Russian refineries cut a major source of gasoline production, forcing Russian energy companies to export crude instead of gasoline. Stateside, the weekly inventory count by the EIA reflected a 3.2 million barrel draw in national stocks in the second week of February, more than market expectations of a 300 thousand decrease.

US gasoline futures rebounded to around $1.95 per gallon on Wednesday, following gains in crude after US Vice-President JD Vance said Tehran had not met American “red lines” in the discussions, keeping the risk of conflict and supply disruption alive. Iranian officials described the talks as constructive, highlighting differing views on progress. Iran’s naval drills and the strategic importance of the Strait of Hormuz, through which a significant share of global oil exports transit, have added to risk premia in oil pricing. Market attention also turned to upcoming US weekly petroleum data, with the American Petroleum Institute report due later Wednesday and the Energy Information Administration release on Thursday. Analysts expect US crude stockpiles to have risen, while distillate and gasoline inventories likely declined.

US gasoline futures dropped to about $1.9 per gallon, a two-week low, following weaker oil prices as traders waited for fresh diplomatic talks in Geneva between the US and Iran. Donald Trump said he would be indirectly involved and suggested Tehran wants an agreement, though recent naval drills near the Strait of Hormuz have raised tensions. Negotiations involving Russia and Ukraine are also planned, but a quick resolution and return of Russian oil supplies appears unlikely. Meanwhile, data from the Energy Information Administration showed US gasoline demand, production, and inventories all rose in the first week of February .