Retail gasoline prices exceed $3 for the first time since 2014

Natural Gas

Forecasts calling for hotter temperatures in major cities on the east coast helped to propel natural gas futures sharply higher on Monday. This comes after a week of being stuck in the $2.90-$3.00 price range.

June'21 natural gas futures traded as high as $3.15/MMBtu on Monday morning but as the week progressed and weather forecasts shifted, prices cooled off and have returned to similar levels as last week.

Today's injection of 71 Bcf into storage brings total gas in storage to 2,100 Bcf which is 4.0% below the 5 year average level.

Electricity

Real-time electricity prices continue to march higher as we approach the summer. The 30-day average real-time price has climbed nearly $2/MWh in the past month.

It is not unusual for electricity prices to rise through September as hotter weather drives people to turn on their A/C's thereby creating greater demand for the power grid.

The 12 and 24 month electricity futures remain relatively unchanged since last week but if you observe the chart below you'll notice a solid uptrend has developed in the past month.

Average U.S. retail gasoline price exceeds $3.00 for the first time since late 2014

Disruptions to Colonial Pipeline operations prompted an increase in the average U.S. retail price for regular grade gasoline (retail gasoline price) to $3.03 per gallon (gal) on May 17, the first time retail gasoline prices averaged more than $3.00/gal since October 27, 2014. The average retail gasoline price in the Lower Atlantic (PADD 1C) increased 10 cents/gal from the previous week to $2.88/gal.

The increased retail price for gasoline in the Lower Atlantic resulted from outages at many gas stations in the region, which occurred because of the pipeline disruption that hindered supply and increased purchases of gasoline in response to the station outages. On May 17, New England (PADD 1A) and Central Atlantic (PADD 1B) retail gasoline prices averaged $2.93/gal and $3.04/gal, respectively, up 6 cents/gal and 5 cents/gal from the previous week. The Midwest (PADD 2) and Gulf Coast (PADD 3) retail gasoline prices averaged $2.91/gal and $2.78/gal, respectively, up 5 cents/gal and 11 cents/gal from the previous week.

After shutting down on Friday, May 7, Colonial Pipeline restarted some pipeline operations on Wednesday, May 12. On Saturday, May 15, Colonial Pipeline announced that it had returned the system to normal operations. Shipments through Colonial Pipeline move about five miles per hour, so some markets may need to rely on regional inventories until the fuel on the Colonial Pipeline can transit the pipeline.

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