Gasoline Pump Prices Near 1-Year High: Is This An Inflationary Threat?
Portfolio Pulse from Neil Dennis
Gasoline pump prices have surged to near a 1-year high, with the national average reaching $3.30 a gallon, driven by rising crude oil prices amid Middle East tensions and attacks on oil shipments. The United States Oil Fund (USO) and the United States Gasoline Fund ETF (UGA) have seen significant movements, with USO near a three-month high. The situation is exacerbated by falling gasoline stockpiles and potential refinery disruptions due to severe weather in the Midwest, affecting facilities like Exxon Mobil Corp's (XOM), Citgo's, and BP Plc's (BP). This rise in fuel prices could influence inflation expectations and the Federal Reserve's rate cut decisions.
February 28, 2024 | 3:39 pm
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POSITIVE IMPACT
The United States Oil Fund (USO) is near a three-month high, reflecting the increase in crude oil prices due to geopolitical tensions and supply concerns.
The rise in crude oil prices directly impacts USO, as it tracks a basket of oil prices. Geopolitical tensions and supply disruptions are likely to keep prices elevated in the short term, potentially benefiting USO.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 80
NEUTRAL IMPACT
The United States Gasoline Fund ETF (UGA) is up 10% in 2024 but saw a slight decline of 0.9% on Wednesday, amid rising wholesale gasoline prices and falling stockpiles.
UGA's performance is closely tied to gasoline prices, which have been volatile. The recent dip may reflect short-term market adjustments, but the overall trend remains upward due to supply concerns.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 75
NEGATIVE IMPACT
BP Plc's (BP) Whiting refinery faces potential threats from severe weather in the Midwest, with no current disruptions reported.
The threat of severe weather to BP's refinery operations could pose a risk to its short-term output and financial performance, especially if it leads to operational shutdowns.
CONFIDENCE 75
IMPORTANCE 65
RELEVANCE 60
NEGATIVE IMPACT
Exxon Mobil Corp's (XOM) Joliet refinery is among those potentially impacted by severe weather in the Midwest, though no disruptions have been reported yet.
While no disruptions have been reported, the potential impact of severe weather on refinery operations could negatively affect XOM's short-term performance, especially if operations are halted.
CONFIDENCE 75
IMPORTANCE 65
RELEVANCE 60