US drivers spending more to fill up in wake of oil's rally

Drivers in the US are paying more to fill their tanks despite swelling gasoline supplies and the lowest seasonal demand for the fuel in decades.
By :
| Updated on: 17 Dec 2020, 04:27 PM
Cars are parked in an auto dealer lot Wednesday, April 15, 2020, in unincorporated St. Louis County, Mo. U.S. retail sales recorded a record drop in March, with auto sales down 25.6%, as the coronavirus outbreak closed down thousands of stores and shoppers stayed home. (AP Photo/Jeff Roberson) (AP)
Cars are parked in an auto dealer lot Wednesday, April 15, 2020, in unincorporated St. Louis County, Mo. U.S. retail sales recorded a record drop in March, with auto sales down 25.6%, as the coronavirus outbreak closed down thousands of stores and shoppers stayed home. (AP Photo/Jeff Roberson) (AP)
Cars are parked in an auto dealer lot Wednesday, April 15, 2020, in unincorporated St. Louis County, Mo. U.S. retail sales recorded a record drop in March, with auto sales down 25.6%, as the coronavirus outbreak closed down thousands of stores and shoppers stayed home. (AP Photo/Jeff Roberson) (AP)
Cars are parked in an auto dealer lot Wednesday, April 15, 2020, in unincorporated St. Louis County, Mo. U.S. retail sales recorded a record drop in March, with auto sales down 25.6%, as the coronavirus outbreak closed down thousands of stores and shoppers stayed home. (AP Photo/Jeff Roberson)

US drivers are facing the highest pump prices in two months, a consequence of the costlier crude oil used to make the fuel.

Domestic retail gasoline averaged $2.19 a gallon on Wednesday, up about 5 cents so far this month, according to auto club AAA. Crude is the culprit. Benchmark crude futures in the US are the most expensive in months, following a rally fueled in part by optimism around the impending circulation of Covid-19 vaccines.

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And the price of oil may rise further, hurting US drivers. Banks, such as RBC, suggest a strengthening physical market and improving consumption in China, have also helped boost prices recently.

(Also read | Global oil demand is rebounding again after November trough)

The crude needed to produce gasoline “is climbing due to the vaccination availability and promise that distribution is building toward being more widely available in 2021," said Jeanette Casselano, a spokeswoman for AAA.

Front-month West Texas Intermediate crude futures are up about $6 a barrel since mid-November. Gasoline futures are trading at the highest since August.

Drivers are paying more to fill their tanks despite swelling gasoline supplies and the lowest seasonal demand for the fuel in decades. This combination typically leads to lower pump prices.

First Published Date: 17 Dec 2020, 04:27 PM IST
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