The market's uncertainty about crude and gasoline prices is reflected in the pricing and implied volatility of futures and options contracts. While there is not sufficient liquidity in the Brent options market to accurately calculate uncertainty, WTI futures and options provide an estimate for crude oil market uncertainty. WTI futures contracts for July 2013 delivery, traded during the five-day period ending April 4, averaged $96.35 per barrel. Implied volatility averaged 18 percent, establishing the lower and upper limits of the 95-percent confidence interval for the market's expectations of monthly average WTI prices in July 2013 at $82 per barrel and $113 per barrel, respectively. New York Harbor reformulated gasoline blendstock for oxygenate blending (RBOB) futures contracts for July 2013 delivery, traded over the 5-day period ending April 4, averaged $2.97 per gallon. The probability that the RBOB futures price will exceed $3.35 per gallon (consistent with a U.S. average regular gasoline retail price above $4.00 per gallon) in July 2013 is about 12 percent.
Currently, at the beginning of the driving season, total gasoline inventories are within their seasonally-typical range, indicating a normal balance between supply (production and imports) and uses (consumption and exports). At the end of March, total gasoline stocks stood at 220 million barrels, 1 million barrels above the level of a year ago, and the same as the previous five-year average for beginning-of-season stocks. However, gasoline consumption has declined over the past five years, and gasoline stocks on a days-of-supply basis are above their five-year average. Moreover, an increase in refining capacity and production this summer is expected to contribute to a smaller draw on gasoline stocks, with projected end-of-season inventories of 209.5 million barrels, 8.8 million barrels above last year's level and 1.7 million barrels above the five-year average.
Gasoline and diesel fuel prices fall for a 6th week
The U.S. average retail price of regular gasoline decreased four cents from the previous week to $3.61 per gallon as of April 8, 2013, down 33 cents from last year at this time. The U.S. average price has declined 18 cents over the last six weeks. The last time prices declined for six consecutive weeks was October 15, 2012 to November 19, 2012. Prices were lower in all regions of the nation except the Rocky Mountains, where the price is $3.52 per gallon, up three cents from last week. The largest decrease came on the Gulf Coast, where the price dropped five cents to $3.43 per gallon. The East Coast and Midwest prices are both lower by four cents, to $3.59 per gallon and $3.55 per gallon, respectively. Rounding out the regions, the West Coast price is $3.93 per gallon, a decline of two cents.
The national average diesel fuel price decreased two cents to $3.98 per gallon, 17 cents lower than last year at this time. The U.S. average price has decreased 18 cents over the last six weeks. Prices decreased in all regions of the nation except the West Coast, where the price increased less than a penny to remain at $4.12 per gallon. The largest decrease came on the Gulf Coast, where the price declined three cents to $3.89 per gallon. The East Coast and Rocky Mountain prices both declined by two cents and are now $4.01 per gallon and $3.90 per gallon, respectively. Rounding out the regions, the Midwest price is $3.96 per gallon, a drop of one cent.