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The fund invests in futures contracts for gasoline, other types of gasoline, crude oil, diesel-heating oil, natural gas and other petroleum-based fuels. The Benchmark Futures Contract is the futures contract on gasoline as traded on the New York Mercantile Exchange that is the near month contract to expire, except when the near month contract is within two weeks of expiration.

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US Energy Secretary announced release of 1 million barrels of gasoline to lower prices in Northeastern US before July 4. Trump criticizes move.

Biden Plans To Release 1 Million Barrels Of Gasoline To Curb Northeast Prices: &#39;Because He&#39;s Unable To Drill Properly,&#39; Trump Says

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Commodities have been performing remarkably well this year, with the Bloomberg Commodity Index, a widely viewed measure of broad commodities prices, rising to its highest level since November. Most of the rally were driven by higher prices for oil, gold, and cocoa.


5 Commodity ETFs Riding High in 2024

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Gas prices are rising, reaching $3.49 per gallon on average in the US. Drone attacks on Russian refineries could lead to higher global fuel prices.

Gas Prices Set For Summer Spike: West Coast Consumers Already Paying More Than $4 A Gallon

U.S. Energy Secretary Jennifer Granholm announced Tuesday that the Biden administration has ordered the release of approximately 1 million barrels of gasoline from the nation&#8217;s reserves to lower pump prices in<a href="https://www.benzinga.com/topic/gasoline"> the Northeastern United States.</a>
The release will occur in 100,000-barrel increments, aimed at easing fuel costs between Memorial Day and July 4. The gasoline is expected to reach local retailers ahead of the Fourth of July holiday, providing relief to consumers at a critical time.
"The Biden-Harris Administration is laser focused on lowering prices at the pump for American families, especially as drivers hit the road for summer driving season," the Department of Energy wrote in a statement. 
Why It Matters: Gasoline prices typically rise during the summer months due to increased demand as Americans travel more for vacations and other activities. This seasonal surge is a result of higher consumption rates, which naturally drives up prices. Warm weather and school holidays encourage road trips, causing a noticeable uptick in fuel usage across the country. 
Notably, gasoline prices are a crucial component of the Consumer Price Index (CPI) basket and a significant input cost for producers.
As <a href="https://thehill.com/policy/energy-environment/4677411-biden-granholm-1-million-barrels-reserve-gasoline-gas-prices/">The Hill </a>reported, they often become a focal point of political debate, especially in election years. High gasoline prices can impact voter sentiment, leading to political scrutiny. Politicians may face pressure to address fuel costs. 
The release is mandated by a congressional bill passed earlier this year to keep the government operational. This legislation requires the sale of gasoline from the Northeast reserve and the subsequent closure of the reserve, which was established following Superstorm Sandy
Trump Reacts: The move is expected to draw criticism from Republicans, reminiscent of the backlash following the Strategic Petroleum Reserve releases in the summer of 2022, ahead of the midterm elections.
As reported by <a href="https://www.forbes.com/sites/brianbushard/2024/05/21/biden-administration-releasing-1-million-barrels-from-gas-reserves-in-bid-to-lower-prices-which-trump-blasts-as-campaign-stunt/?sh=4188e17c5944">Forbes</a>, former President Donald Trump also criticized the current action, asserting that President Joe Biden is tapping into the reserves &#8220;in a bid to lower prices before the election&#8221; and that gas prices are &#8220;higher than they've been in a long time.&#8221;
Trump further accused Biden of resorting to the reserve &#8220;because he's unable to drill properly,&#8221; speaking to reporters outside the courtroom where his hush money trial is ongoing.
Market Reactions
Gasoline futures are experiencing a 4% decline this week, on track to notch a three-day losing streak after dropping below $2.50 a gallon. Current gasoline prices are approximately 43% lower than their June 2022 peak, when they surpassed $4.00 a gallon.
Chart: Gasoline Prices Are Currently 43% Lower Compared To 2022 Peak
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/22093857/image-94-1024x495.png" alt="" class="wp-image-350149" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/22093857/image-94-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/22093857/image-94-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/22093857/image-94-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/22093857/image-94-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/22093857/image-94.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
The United States Gasoline Fund LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UGA#NYSE">UGA</a>) saw a 1.2% decrease on Monday, followed by a 1% drop on Tuesday, and continued to fall by another 1% during early trading hours on Wednesday. 
Energy-related stocks, as tracked by the Energy Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLE#NYSE">XLE</a>), have underperformed recently, dropping by 0.5% on Tuesday and by 0.6% as of 09:35 a.m. EDT Wednesday.
Among the notable losers in energy stocks on Wednesday were Devon Energy Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DVN#NYSE">DVN</a>), Marathon Oil Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MRO#NYSE">MRO</a>), and EQT Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EQT#NYSE">EQT</a>), each experiencing declines of approximately 1.4-1.5%.
Read now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/38944384/3-stocks-to-watch-as-copper-surges-to-record-highs-something-is-cooking-in-china">3 Stocks To Watch As Copper Surges To Record Highs: &#8216;Something Is Cooking In China&#8217;</a>
Image generated using artificial intelligence via Midjourney.

Biden Plans To Release 1 Million Barrels Of Gasoline To Curb Northeast Prices: 'Because He's Unable To Drill Properly,' Trump Says

Commodities have been performing remarkably well this year, with the Bloomberg Commodity Index, a widely viewed measure of broad commodities prices, rising to its highest level since November. Most of the rally were driven by higher prices for oil, gold, and cocoa. 
While most commodity ETFs have been soaring, United States Oil Fund (ARCA:USO), United States Brent Oil Fund (ARCA:BNO), Invesco DB Agriculture Fund (ARCA:DBA), United States Gasoline ETF (ARCA:UGA) and GraniteShares Gold Trust (ARCA:BAR) have been the show stealers so far this year. 
Global oil prices have soared to the highest level in seven months, buoyed by the Ukrainian attacks on Russian energy facilities and escalating conflict in the Middle East that has threatened the oil supply. Brent oil rose above $89 per barrel for the first time since early September, while U.S. crude reached a five-month high of $85 per barrel. Brent and U.S. crude prices have risen 15% and 19%, respectively, since the start of the year. Gas prices have also started to climb up ahead of the summer driving season. 
Precious metals like gold and silver took flight in March. The yellow metal logged its biggest monthly rise in more than three years in March, rising 8.5% on renewed expectations of U.S. interest rate cuts in June, strong safe-haven appeal and strong central bank buying. 
Meanwhile, silver prices climbed above the $25-an-ounce mark for the first time in 2024 on higher industrial and manufacturing demand. The global push for green energy, increasing demand in areas like 5G, a rebound in global computer shipments, the photovoltaics and automotive industries, and new sources of demand for sensors used in IoT and OLED lighting are propelling silver demand. 
Industrial metals, such as copper and nickel, are seeing upticks in prices, buoyed by supply concerns and robust demand, driven by increased production of electric vehicles. Notably, copper prices soared to an 11-month high in March following an agreement by China-based smelters to cut production. These smelters are responsible for processing half of the global copper supply. The copper market is tightening, with China smelter maintenance set to peak in April and May, which could hurt refined copper production, thereby hiking the price. 
Coming to agriculture commodities, cocoa prices nearly tripled in the first quarter to reach a level twice as high as the previous record set 50 years ago. The commodity skyrocketed to a new all-time high of more than $10,000 a ton from $3,000 a ton at the start of the year. A third consecutive year of supply shortages caused by poor harvests in West Africa led to the surge. 
We have profiled the ETFs below: 
United States Oil Fund (ARCA:USO) &ndash; Up 21.2% 
United States Oil Fund is the most popular ETF in the oil space, with an AUM of $1.4 billion and an average daily volume of 4 million shares. It seeks an average daily percentage change in USO&#39;s net asset value for any period of 30 successive valuation days within plus/minus 10% of the average daily percentage change in the price of the Benchmark Oil Futures Contract over the same period. United States Oil Fund has an expense ratio of 0.60%. 
United States Brent Oil Fund (ARCA:BNO) &ndash; Up 19.7% 
United States Brent Oil Fund is designed to track the daily price movements of Brent crude oil. It provides exposure to the near-month futures contract traded on the ICE Futures Exchange. If the near-month futures contract is within two weeks of expiration, the benchmark will be the next-month contract to expire. BNO invests primarily in listed crude oil futures contracts and other oil-related futures contracts, and may invest in forwards and swap contracts. United States Brent Oil Fund amassed $134.2 million in its asset base, and charges 1.00% as annual fees and expenses. Volume is good as it exchanges 600,000 shares a day on average. 
Invesco DB Agriculture Fund (ARCA:DBA) &ndash; Up 19.4% 
Invesco DB Agriculture Fund tracks the DBIQ Diversified Agriculture Index Excess Return, a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities. It has key holdings in cocoa, coffee and live cattle, with double-digit exposure each. Invesco DB Agriculture Fund charges 93 bps on an annual basis and trades in a volume of 406,000 shares a day. It has amassed $788.6 million in its asset base. 
United States Gasoline ETF (ARCA:UGA) &ndash; Up 18.9% 
United States Gasoline ETF is designed to track the movements of gasoline prices in percentage terms. The benchmark futures contract is the contract on gasoline as traded on the NYMEX. If the near-month contract is within two weeks of expiration, the benchmark will be the next-month contract to expire. United States Gasoline ETF is illiquid, with a daily trading volume of about 28,000, suggesting that investors have to pay extra beyond the annual fee of 0.97% per year. The fund has managed assets of $120.3 million. 
GraniteShares Gold Trust (ARCA:BAR) &ndash; Up 10.4% 
GraniteShares Gold Trust is designed to seek the performance of the price of gold. It provides an investment similar to an investment in gold through a Trust without having to open a metal account. It is among the lowest-cost gold ETFs on the market, having an expense ratio of 0.17%. GraniteShares Gold Trust has amassed $1 billion in its asset base while trading in an average daily volume of 663,000 shares.
<a href="https://www.zacks.com/stock/news/2249980/5-commodity-etfs-riding-high-in-2024?cid=CS-BENZ-FT-etf_news_and_commentary-2249980">To read this article on Zacks.com click here.</a>

Gas prices at the pump are on the rise and could lead to a higher national average next month, exacerbating inflation concerns and lowering the prospect of <a href="https://www.benzinga.com/federal-reserve">interest rate cuts during the first half of 2024</a>.
According to the American Automobile Association&#8217;s Gas Prices <a href="https://gasprices.aaa.com/">Monitor</a>, the national average price of a gallon of regular gas hit $3.49 on Tuesday.
Some states, particularly the higher taxed regions on the West Coast are already paying upwards of $4 a gallon, with California&#8217;s average hitting $4.92, Hawaii at $4.70, Washington at $4.33 and Nevada $4.22.
Those paying the lowest are the states closest to domestic refining facilities around the Mexican Gulf and up through the Midwest. 
<h2 class="wp-block-heading">Wholesale Price Leaps As Ukraine Strikes Russia Refineries</h2>
Much of the recent moves higher at the pump are due to higher wholesale gasoline prices on commodity exchanges. On Tuesday, RBOB Gasoline futures were down a shade after hitting their highest levels since August on Monday. 
The United States Gasoline Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UGA#NYSE">UGA</a>) an exchange traded fund that tracks the price of wholesale gas futures, gained 1.7% to $71.58 on Monday, hitting its highest level since September.
Also Read: <a href="https://www.benzinga.com/news/24/03/37811556/saudi-aramco-ceo-amin-nasser-says-abandon-the-fantasy-of-phasing-out-oil-and-gas">Saudi Aramco CEO Amin Nasser Says &#8216;Abandon The Fantasy Of Phasing Out Oil And Gas&#8217;</a>
<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="750" height="650" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/19081012/newplot-2024-03-19T120942.286.png" alt="" class="wp-image-257159" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/19081012/newplot-2024-03-19T120942.286.png 750w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/19081012/newplot-2024-03-19T120942.286-300x260.png 300w" sizes="(max-width: 750px) 100vw, 750px" /></figure>
The surge in gasoline prices in the past couple of weeks has mainly been down to continued drone attacks by Ukraine on Russian refineries. Commodity trader Gunvor believes as much as 600,000 barrels worth of daily output capacity has been halted by these attacks.
JPMorgan analysts, meanwhile, reckon that number is closer to 900,000 barrels per day.
Patrick De Haan, analyst at Gas Buddy, said: &#8220;Russia has total refining capacity of around 5.5 million barrels per day, so at best 10% of their refining is offline, but by some estimates, it may be closer to 15%.&#8221;
Sanctions on Russia have halted oil and petroleum exports, leading to a squeeze in gasoline stocks for both its domestic needs and for countries bypassing Western sanctions. This situation is expected to increase reliance on OPEC&#8217;s production, potentially driving up global distillate prices.
&#8220;Drone attacks on Russia refineries adds to global supply risks,&#8221; <a href="https://twitter.com/search?q=%23OOTT&amp;src=hashtag_click">said</a> commodity analyst Giovanni Staunovo on X.
Among the most significant attacks so far has been the March 12 strike on the Lukoil refinery at Nizhny Novgorod, which halved diesel production and cut gasoline output by around a quarter. 
A March 13 attack on Rosneft&#8217;s Ryazan refinery knocked out a third of its gasoline and more than half its diesel production. And a March 16 strike on the Syzran refinery halted production completely.
<h2 class="wp-block-heading">Crude Trading Above $80 A Barrel</h2>
In the broader oil market, crude prices remained close to four-month highs, with Nymex WTI U.S. crude futures standing firm at $82.13 a barrel. The United States Oil Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) held at October highs at around $78.
Implications in the U.S. of rising car fuel prices extend far beyond the commodity market, to the Federal Reserve and the White House.
The Fed meets this week for its March Open Market Committee. At the end of 2023, this was broadly expected to be the meeting at which the central bank kicked off its rate cutting cycle. Now, the earliest economists anticipate any changes is May, with most projecting adjustments in either June or July.
Last week&#8217;s consumer inflation data showed that the energy index combined with the shelter index contributed to nearly two-thirds of the total rise in inflation in February.
Meanwhile, oil companies are benefiting from the renewed strength in oil prices. Exxon Mobil Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>) is up 7.5% in March, while Chevron Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CVX#NYSE">CVX</a>) is up 2.2% on the month.
The Energy Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLE#NYSE">XLE</a>), which tracks U.S. oil companies, including the above, is up 5.8% in March. 
Now Read: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37804727/oil-prices-jump-to-four-month-high-surpass-200-day-average-momentum-indicators-rema">Oil Prices Jump To Four-Month High, Surpass 200-Day Average: &#8216;Momentum Indicators Remain Bullish</a>&#8216;
Image created using artificial intelligence with Midjourney.

Ukraine drone attacks are increasingly targeting Russian infrastructure, and at the top of the list are oil and refining installations. Could this have a knock-on impact on <a href="https://www.benzinga.com/markets/commodities">gasoline prices in the U.S.</a>?
 In the last two days, two Russian fuel depots have been damaged — one critically — in separate Ukrainian drone and rocket attacks.
Industry sources, reported by Reuters, said the attacks left the crude distillation plant at Norsi so damaged that around half of the refinery&#8217;s output has been cut.
That&#8217;s significant, as the refinery is capable of producing 340,000 barrels of gasoline a day. That equates to 11% of Russia&#8217;s gasoline.
Also Read: <a href="https://www.benzinga.com/markets/equities/24/03/37658256/geopolitical-unrest-halts-bp-adnocs-2b-bid-for-israeli-gas-firm">Geopolitical Unrest Halts BP, Adnoc&#8217;s $2B Bid For Israeli Gas Firm</a>
<h2 class="wp-block-heading">Russia Bans Gasoline Exports</h2>
The Kremlin already banned exports of gasoline starting on March 1, it said, to help lower high domestic prices and to coincide with spring maintenance and summer holidays.
Warren Patterson, head of commodity strategy at ING, said: &#8220;The announcement is not expected to have a large impact on the global gasoline market as Russia consumes most of the gasoline it produces.&#8221;
But, David Sheppard at the Financial Times <a href="https://twitter.com/OilSheppard/status/1767824383517634852">posted</a> on X on Wednesday: &#8220;Ukraine going after Russian oil refineries potentially reflects some understandable frustration with the West's soft-pedal approach to crimping Moscow's energy revenues. 
&#8220;But if Russian refined fuel exports fall substantially, the impact on pump prices may become a headache for Joe Biden.&#8221;
<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="750" height="650" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/13100833/newplot-2024-03-13T140818.915.png" alt="" class="wp-image-250180" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/13100833/newplot-2024-03-13T140818.915.png 750w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/13100833/newplot-2024-03-13T140818.915-300x260.png 300w" sizes="(max-width: 750px) 100vw, 750px" /></figure>
He added that if Ukraine were to continue its attacks on Russian refineries and, depending on how successful the strategy, &#8220;take out enough gasoline capacity — at some point Russia would need to start importing.&#8221;
And if Russia needs to start importing, so would the countries it still supplies.
This could put pressure on OPEC+&#8217;s demand forecasts. The cartel expects increases of 2.25 million barrels a day in 2024 and a further 1.85 million a day in 2025, suggesting a potential surge in oil demand.
<h2 class="wp-block-heading">Market Reaction</h2>
After easing over the last week or so, crude oil prices were up on Wednesday following news of the Ukraine refinery strikes. Nymex West Texas Intermediate climbed 2.2% to $79.24 a barrel.
The United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>), an exchange traded fund that tracks U.S. oil prices, was up 1.8% at $73.33.
Meanwhile, U.S. wholesale gasoline prices were also higher, with RBOB futures climbing 2% to $2.6355 a gallon. The United States Gasoline Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UGA#NYSE">UGA</a>) was 1.9% higher at $67.28.
Gas prices at the pump have remained relatively flat in recent weeks, averaging around $3.40 a gallon. 
Patrick De Haan, analyst at Gas Buddy, said it won&#8217;t last. 
&#8220;Most areas are nearing the finish line on the changeover to lower RVP summer-spec fuels, which will start flowing to retail in the weeks ahead, and with it, higher cost,&#8221; De Haan said. 
Now Read: <a href="https://www.benzinga.com/government/24/03/37632374/fears-of-middle-east-escalation-as-israel-and-hezbollah-clashes-intensify">Fears Of Middle East Escalation As Israel And Hezbollah Clashes Intensify</a>
Photo via Shutterstock.

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Ukraine Drones Target Russian Oil Installations: Why US Gasoline Prices Are At Risk

Three people were reportedly killed and several others injured after an anti-ship ballistic missile launched by Iran-backed Houthi rebels in Yemen struck bulk carrier M/V True Confidence in the Gulf of Aden <a href="https://www.benzinga.com/news/global">late on Wednesday</a>.
The crew abandoned the Barbados-flagged, Liberia-owned vessel following the attack, which caused significant damage. At least three of the injured were reported to be in critical condition.
U.S. Central Command said on X that coalition warships were responding and &#8220;are addressing the situation.&#8221;
It added: &#8220;This is the fifth ASBM fired by Houthis in the last two days. Two of these ASBMs impacted two shipping vessels — M/V MSC Sky II and M/V True Confidence — and one ASBM was shot down by USS Carney. 
&#8220;These reckless attacks by the Houthis have disrupted global trade and taken the lives of international seafarers.&#8221;
While the attacks have driven many freight carriers to avoid the Red Sea/Suez Canal/Mediterranean route to Europe and the U.S. east coast, some persist, as the alternative Cape of Africa route is longer and can add up to two weeks to a journey.
&#8220;This situation has led to an immediate contraction in market capacity and a surge in shipping rates, with significant impacts on global trade networks and economic stability,&#8221; said Zera Zheng, global head of business resilience consulting at Norwegian shipping giant Maersk, which has been avoiding the Red Sea since mid-December.
<h3 class="wp-block-heading">Oil Prices Creep Higher This Year</h3>
Oil prices haven&#8217;t responded violently, but the longer the war in Gaza continues to provoke antipathy towards Israel from the Middle East, oil prices have slowly risen back to four-month highs.
The United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>), an exchange-traded fund that tracks U.S. oil prices, rose 1.2% to $74.34 on Wednesday but was down 0.6% in pre-market trade on Thursday. So far in 2024 it has risen 11.5%.
Also Read: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37455561/natural-gas-soars-after-top-us-producer-slashes-output-oil-prices-dip-as-opec-exten">Natural Gas Soars After Top US Producer Slashes Output; Oil Prices Dip As OPEC+ Extends Production Curbs</a>
<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="750" height="650" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/07091148/newplot-2024-03-07T131130.512.png" alt="" class="wp-image-243144" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/07091148/newplot-2024-03-07T131130.512.png 750w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/07091148/newplot-2024-03-07T131130.512-300x260.png 300w" sizes="(max-width: 750px) 100vw, 750px" /></figure>
Gasoline prices are also rising, underpinned by the rise in crude. After falling to a three-year low in December, RBOB Gasoline futures are up 28.7% to their highest levels since October 2023.
The United States Gasoline Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UGA#NYSE">UGA</a>) is up 16% over the same period. The U.S. average gas price at the pump has risen from $3.06 at the beginning of the year, to $3.40 on Wednesday, according to Gas Buddy.
Meanwhile, U.S. natural gas prices remain more than 5% over the week after EQT Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EQT#NYSE">EQT</a>), the largest producer announced on Monday it was slashing output due to low prices. The United States Natural Gas Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UNG#NYSE">UNG</a>) showed a weekly gain of 5.5%.
<h3 class="wp-block-heading">Cease-Fire Talks Deadlocked</h3>
Back in the Gaza Strip, desperate civilians hoping for some relief from the shelling and fighting during the holy month of Ramadan, looked set to be disappointed, with cease-fire talks seemingly deadlocked. 
The deal to release Israeli hostages held in Gaza by Hamas in exchange for a cessation in hostilities appeared to be at an impasse after Israel refused to send delegates to Cairo to join talks with Hamas and diplomats from Egypt, Qatar and the U.S.
Israel had previously said it would not join the Cairo talks without first being provided a list of the names of hostages — alive and dead — still being held by Hamas.
Fears are now growing that without a cease-fire by Ramadan, tensions could erupt across the Islamic Middle East. President Joe Biden said earlier this week that without a cease-fire by the start of the holy month, the region could become &#8220;very dangerous.&#8221;
Now Read: <a href="https://www.benzinga.com/news/24/03/37456347/kamala-harris-calls-for-immediate-ceasefire-in-gaza-asks-israel-to-ramp-up-aid-deliveries-our-common">Kamala Harris Calls For Immediate Ceasefire In Gaza, Asks Israel To Ramp Up Aid Deliveries: &#8216;Our Common Humanity Compels Us To Act&#8217;</a>
Image: Shutterstock.

3 Killed In Houthi Missile Attack, Oil Prices Dip From 4-Month Highs, Gaza Cease-Fire Talks Stall

Gasoline prices at the pump are on the rise again, after falling to a two-and-a-half-year <a href="https://www.benzinga.com/topic/gas-prices">low in early January</a>.
On Wednesday, the national average price rose to $3.30 a gallon, up 2.2 cents from a week ago, and up 25 cents from $3.05 hit on January 11, which was the lowest since June 2021.
Underlying crude oil prices have been rising in recent weeks with Nymex WTI crude futures up 10% since the start of the year as rising tensions in the Middle East and attacks on oil shipments in the Red Sea have raised concerns over supply.
On Wednesday, WTI was up fractionally at $78.90 a barrel, while the United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>), an exchange-traded fund that tracks a basket of oil prices, was standing close to a three-month high at $73.84.
<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="750" height="650" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/02/28102612/newplot-2024-02-28T142556.047.png" alt="" class="wp-image-232553" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/02/28102612/newplot-2024-02-28T142556.047.png 750w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/02/28102612/newplot-2024-02-28T142556.047-300x260.png 300w" sizes="(max-width: 750px) 100vw, 750px" /></figure>
Also Read: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/02/37337380/what-if-the-fed-does-not-cut-rates-this-year-inflations-stickiest-mile-to-2-target">What If The Fed Does Not Cut Rates This Year? Inflation&#8217;s Stickiest Mile To 2% Target</a>
<h2 class="wp-block-heading">Wholesale Gasoline Price Jump</h2>
Wholesale gasoline prices have risen more dramatically as gasoline stockpiles, <a href="https://www.eia.gov/petroleum/weekly/gasoline.php">reported</a> by the Energy Information Administration, have fallen over the past four weeks.
Since the beginning of the year the RBOB Gasoline futures price is up 22% at $2.575 a gallon. The United States Gasoline Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UGA#NYSE">UGA</a>) is up 10% in 2024, but was trading 0.9% lower on Wednesday.
Patrick De Haan, analyst at Gas Buddy, <a href="https://twitter.com/GasBuddyGuy/status/1762828762658267316">said</a> on X: &#8220;The national average has risen to $3.30/gal this morning, up 2.2 cents from last week and will likely continue to climb. By later today, we could see the national average back to a YoY increase.&#8221;
Currently, he said, the national average price remained just 1.5 cents below a year ago.
Adding to concerns, a storm system in the Midwest that has produced several tornados in the region was reported by De Haan to be nearing three major refineries — Exonn Mobil Corp&#8216;s (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>) Joliet, Citgo&#8216;s Lemont and BP Plc&#8216;s (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BP#NYSE">BP</a>) Whiting facilities.
As yet, no disruptions have been reported.
<h2 class="wp-block-heading">Inflation Pressure</h2>
Rising fuel prices could add to speculation that inflation may remain stickier than expected in the coming months, further adding to the possibility that the Federal Reserve&#8217;s highly-anticipated first-rate cut will be delayed beyond its May or June policy meetings.
While several rate cuts are priced in by the market for this year, persistent and continued attacks in the Red Sea and any escalation of tensions in the Middle East could push oil and gasoline prices higher, which would have an impact on headline consumer price inflation.
"The market might be wrong, as much as it was wrong in completely underestimating inflation and overestimating the slowdown of the economy. And to be fair, the Fed, by delaying the tightening cycle by one year, was in the same camp," said Claudio Irigoyen, rates analyst at Bank of America.
Now Read: <a href="https://www.benzinga.com/markets/equities/24/02/37344387/warren-buffett-ignores-buy-and-hold-strategy-with-this-home-builder-are-other-stocks-at-risk">Buffett Ignores Buy-And-Hold Advice With This Home Builder Stock</a>
Image: Shutterstock

Gasoline Pump Prices Near 1-Year High: Is This An Inflationary Threat?

Oil prices rose on Tuesday pushing up average gasoline prices at the pump on concerns supply could be disrupted as Iran tested a ballistic missile in the Gulf of Oman, while demand hopes were led by OPEC raising its economic forecasts.
Nymex WTI, the U.S. benchmark crude oil futures contract, was up 1.8% in afternoon trading at $78.27 a barrel — its seventh-consecutive daily gain. Closing in on the $80-a-barrel mark would take it to its highest level since November.
Brent crude, the European benchmark, was up 1.2% at $82.97 a barrel, while the United States Oil Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USO#NYSE">USO</a>) an exchange-traded fund (ETF) that tracks the price of light-sweet crude, climbed 1% to $72.80.
<h2 class="wp-block-heading">Iran Launches Missiles</h2>
Iran said on Tuesday that it had launched long-range ballistic missiles from one of its warships in the Gulf of Oman for the first time, firing two projectiles capable of striking targets within a range of 1,700 kilometers, or 1,050 miles.
The missile, according to the Iranian Islamic Revolutionary Guard Corps. (IRGC), traveled 750km, before hitting a target in the Iranian desert.
The IRGC said in a statement: &#8220;Through this new achievement, our range of influence and naval power have increased to any point required.&#8221;
The missile test raised concerns that Iran could, if drawn into a wider Middle East conflict, begin targeting shipping in the Gulf of Oman as it exits the oil producing areas in the Persian Gulf. Or, if it targets Israel, the escalation could impact oil production in the region.
Also Read: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/02/37094859/magnificent-7-is-the-most-crowded-trade-among-institutional-investors-with-two-thir">Magnificent 7 Is &#8216;The Most Crowded Trade&#8217; Among Institutional Investors</a>
<h2 class="wp-block-heading">Rising Gas Prices</h2>
Paris-based International Energy Agency said on Tuesday, however, that downward pressure on prices would resume this year in the absence of major geopolitical escalation.
IEA executive director Fatih Birol said: &#8220;Oil supply increases from the Americas will be more than enough to meet demand growth this year, putting downward pressure on oil prices this year.&#8221;
Meanwhile, the price of gasoline at U.S. pumps is up slightly due to high demand and tighter supply. Patrick De Haan at Gas Buddy said on Tuesday that the national average price per gallon was up to $3.23, the highest it&#8217;s been since early December. 
Prices of wholesale gasoline have continued to rise over the past couple of weeks, with RBOB futures now up to $2.4045 a gallon — its highest level since late September.
And the United States Gasoline Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UGA#NYSE">UGA</a>), which tracks the price of RBOB wholesale gasoline, 1.6% at $68.71 — also a high since September.
<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="750" height="650" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/02/13151043/newplot-85.png" alt="" class="wp-image-214672" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/02/13151043/newplot-85.png 750w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/02/13151043/newplot-85-300x260.png 300w" sizes="(max-width: 750px) 100vw, 750px" /></figure>
Warren Patterson, commodities strategist at ING said prices &#8220;were likely to remain supported in the short term as refineries go into maintenance season.&#8221;
<h2 class="wp-block-heading">OPEC Raises Economic Forecast</h2>
OPEC, the oil cartel, released its latest monthly oil report on Tuesday, and while it didn&#8217;t change its demand forecasts, it raised its economic forecast amid easing inflation and expected cuts in interest rates.
Its outlook, on the whole, was balanced: &#8220;Robust economic activity in China, global air travel recovery and expected healthy petrochemical feedstock requirements will be key for oil demand growth in 2024."
It added, however: &#8220;Inflation levels, monetary tightening measures and sovereign debt levels could weigh on global oil demand prospects in the current year.&#8221; 
Read Now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/02/37101164/could-empty-office-space-spark-systemic-credit-event-at-regional-banks">Could Empty Office Space Spark &#8216;Systemic Credit Event&#8217; At Regional Banks?</a>

Oil Prices Up As Iran Tests Ballistic Missiles, OPEC Raises Economic Forecasts

U.S. motorists&#8217; hopes that the price of gasoline will fall below $3 a gallon in time for the Christmas holidays could be realized in the next few days if benchmark <a href="https://www.benzinga.com/news/23/12/36112158/oil-enters-bear-market-as-crude-prices-slump-to-five-month-low">oil prices keep falling on commodity markets</a>.
Patrick De Haan, oil market analyst and Twitter&#8217;s @GasBuddyGuy, said Friday the national average pump price had fallen to $3.17 a gallon and was still moving lower.
Oil prices and wholesale gasoline prices were higher on Friday, however. The United States Gasoline Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UGA#NYSE">UGA</a>), as an exchange-traded fund that tracks gas prices, was up 2% at $59.30.
The last time the average pump price was below $3 was in May 2021 — but back then it was on its way higher, following several years at less than $3. At its lowest in April 2020, during a massive drop in demand during the Covid pandemic, motorists were paying an average of just $1.84.
Also Read: <a href="https://www.benzinga.com/markets/equities/23/12/36138172/solar-energy-broke-records-in-2023-why-are-shares-tumbling">Solar Energy Broke Records In 2023, Why Are Shares Tumbling?</a>
<h2 class="wp-block-heading">Oil Market Shocks</h2>
You only have to look at the underlying commodity market to see why it was so cheap back then: in mid-April 2020, Nymex West Texas Intermediate, the U.S. benchmark oil futures price, was already trading at historic lows between $15-$20 a barrel — then on April 20, it suddenly dived into negative territory — essentially meaning oil producers should be paying to have their oil taken off them.
But that&#8217;s the nature of oil markets. They are prone to shocks — and we&#8217;ve seen a few. Particularly in the 1970s and 80s during strife in the Middle East that sent prices soaring. Unfortunately — for the motorist — upside shocks are more common than ones that drive prices lower.
But here&#8217;s a sign that everyone in the U.S. should welcome. Wholesale gasoline prices have just fallen below $2 a gallon.
De Haan Tweets: &#8220;NYMEX RBOB (the benchmark for the future of #gasprices) has just fallen below $2/gal for the first time since 2021. GOOD NEWS: this signals a strong possibility that the national average will fall to $2.99 by Christmas if it can remain at/below that level.&#8221;
<h2 class="wp-block-heading">Consumers Are Happy, But Europeans Aren&#8217;t</h2>
Falling gas prices keep the consumer happy, too. The price of petroleum at the pump is as good a measure of inflation as most consumers need. Indeed, Friday&#8217;s <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/23/12/36154833/us-consumer-sentiment-sharply-rebounds-in-december-up-16-1-year-over-year-inflation-ex">Michigan Consumer Confidence</a> survey for December showed sentiment rising to its highest level since August.
&#8220;Everything is just gas prices,&#8221; said Michael Antonelli, market strategist at Baird.
But spare a thought for the Europeans — of which this reporter is one. Here in the UK we&#8217;re paying an average of around £5.64 a gallon — that&#8217;s $7.07.
And look at this over in France, Tweeted by our @GasBuddyGuy:
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<blockquote class="twitter-tweet" data-width="500" data-dnt="true"><a href="https://twitter.com/hashtag/GasPrices?src=hash&amp;ref_src=twsrc%5Etfw">#GasPrices</a> in NE France: Super 95 (90-91 AKI): €1.829/L or $7.44/gal Super 98 (93 AKI): €1.899/L or $7.73/gal Diesel: €1.829/L or $7.44/gal Prem Diesel: €1.889/L or $7.68/gal <a href="https://t.co/6bhr6HMdkv">pic.twitter.com/6bhr6HMdkv</a>
&mdash; Patrick De Haan &#x26fd;&#xFE0F;&#x1f4ca; (@GasBuddyGuy) <a href="https://twitter.com/GasBuddyGuy/status/1733137191528763725?ref_src=twsrc%5Etfw">December 8, 2023</a></blockquote>
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Also Read: <a href="https://www.benzinga.com/news/23/12/36112158/oil-enters-bear-market-as-crude-prices-slump-to-five-month-low">Oil Enters Bear Market As Crude Prices Slump To Five-Month Low</a>

Gas Poised To Fall Below $3 A Gallon: But Spare A Thought For The Heavily-Priced Europeans

Memorial Day, which signals the start of the <a href="https://www.benzinga.com/topic/summer-driving-season">summer driving season, </a>is upon us and cash-strapped consumers have an eye on pump prices as they navigate through a tough economic climate.
Fortunately, for their relief, gas prices are trading off the levels seen a year ago.
What Happened: The nationwide average price of regular gasoline was $3.578 a gallon, according to data provided by the American Automobile Association. This, however, marked an increase from the week-ago average of $3.539.
A year ago, prices topped $4.600, when higher inflation and the Ukraine-Russia war sent gas prices skyrocketing.
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="694" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/05/29033333/Weekly-Gas-Prices-EIA-1024x694.png" alt="" class="wp-image-44444" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/05/29033333/Weekly-Gas-Prices-EIA-1024x694.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/05/29033333/Weekly-Gas-Prices-EIA-300x203.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/05/29033333/Weekly-Gas-Prices-EIA-768x520.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/05/29033333/Weekly-Gas-Prices-EIA.png 1240w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Despite the easing from a year ago, gas prices are still above the levels seen before 2022.
In line with the typical trend, prices were the highest in the states on the West Coast. Consumers in the Southeastern region enjoyed the cheapest prices.
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="860" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/05/29033347/State-Gas-Prices-AAA-1024x860.png" alt="" class="wp-image-44445" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/05/29033347/State-Gas-Prices-AAA-1024x860.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/05/29033347/State-Gas-Prices-AAA-300x252.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/05/29033347/State-Gas-Prices-AAA-768x645.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/05/29033347/State-Gas-Prices-AAA.png 1240w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
See Also:<a href="https://www.benzinga.com/money/best-commodity-etfs"> Best Commodity ETFs Right Now</a>
Demand during the long weekend is expected to increase. AAA forecasts that Memorial Day trips are set to increase 6% year-over-year in 2023. It expects more than 37 million Americans to drive to their destination.
AAA sees the slight week-over-week uptick in gas prices to be mitigated by the low cost of crude oil. A barrel of WTI-grade crude oil ended Friday's session at $72.67.
"Pump prices could stabilize or fall once this long weekend is in the rearview mirror," said Andrew Gross, a spokesperson for AAA.
Why It's Important: Any gas price inflation could act as a setback as the economy grapples with multiple headwinds. The <a href="https://www.benzinga.com/23/05/32501319/feds-kashkari-open-to-idea-of-moving-slow-on-rates-but-does-not-support-pivot">Federal Reserve has shown no signs of pivoting</a> even after raising the Fed funds rates to a 16-year high of 5-5.25%.
The central bank is held back by inflation that is stubbornly holding above its target.
The banking crisis has added another element of risk to the economy. Predictions are for the economy to at least dip its toe into a mild recession. On a positive note, sanity prevailed as after prolonged deliberations the White House and House Republicans agreed on a budget deal. If the bill is ratified by Congress and signed into law by President Joe Biden, we may have averted a precipitous economic collapse.
Against this backdrop, higher gas prices may prove unhealthy for consumer spending, which fuels the bulk of economic activity.
All eyes would be on gas prices in the near term to see if there is any pain in the pump that can slow down growth further.
The United States Gasoline Fund, LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UGA#NYSE">UGA</a>) ended Friday&#8217;s session 1.46% higher at $61.35 a barrel, according to <a href="https://benzinga.grsm.io/lxquj26b2sag">Benzinga Pro data.</a>
Read Next: <a href="https://www.benzinga.com/news/23/04/31941906/gas-prices-possibly-peaked-short-term-long-term-pump-prices-could-rise-as-us-shifts-to-evs">Gas Prices Possibly Peaked Short-Term; Long-Term Pump Prices Could Rise As US Shifts To EVs</a>

Media

Gas Prices Stay Calm Over Memorial Day Weekend, But AAA Warns Of Uncertain Future

Skyrocketing oil and gasoline prices have some Americans calling for a return to the pricing controls of the 1970s.
Joseph Brusuelas, principal and chief economist for RSM US LLP, discussed price controls in a new <a href="https://realeconomy.rsmus.com/the-illusion-of-inventory-and-price-controls-in-the-current-energy-market/">blog post</a> this week and outlined exactly why they are a bad idea.
What Are Price Controls? Price controls are government actions taken to manipulate free market prices. While many people may think of price controls as a rigid policy such as rent-controlled housing with a hard cap on rent, Brusuelas said price control policies actually fall on a spectrum ranging from mild to severe.
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/03/26152205/why-inflation-during-times-of-war-is-typical-and-could-get-even-worse">Why Inflation During Times Of War Is Typical And Could Get Even Worse</a> 
Brusuelas said the mild end of the price control spectrum would be the actions taken by the Federal Reserve, including interest rate changes and quantitative easing and tightening.
The severe end of the price control spectrum includes the actions taken by the U.S. Office of Price Administration during World War II. The OPA set prices and imposed rationing for a wide range of products to support the war effort, including gasoline, rubber, sugar and coffee. Another example of extreme price controls came in the 1970s when Americans in certain areas were only allowed to purchase gasoline on certain days of the week. President Richard Nixon enacted wage controls in 1970s to help combat inflation.
Failed Experiment? Brusuelas said the price controls of the 1970s &quot;spectacularly failed.&quot;
&quot;Those price controls didn&rsquo;t work &mdash; the price of gasoline continued to rise, and price controls and stringent rules for purchases resulted in inefficiencies,&quot; he said.
The&nbsp;United States Gasoline Fund LP (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/uga#NYSE">UGA</a>) is up a whopping 86.6% in the last year.&nbsp;
While it may seem like gasoline is a necessity that consumers can&#39;t do without, Brusuelas said history demonstrates consumers and the market have more flexibility than it may seem. In addition to driving fewer miles, the 1970s oil shock brought about a new wave of compact cars and energy-efficient vehicles. Today&#39;s environment could increase&nbsp;demand for electric vehicles or other clean energy transportation services.
Brusuelas said price controls certainly serve a purpose during wartime, when a nation&#39;s survival may depend on whether or not its military has access to the resources it needs. But higher prices alone aren&#39;t enough to justify price controls.
&quot;Prices in an open economy are the most efficient mechanism for determining consumer choice,&quot; Brusuelas said.
The environment in 2022 isn&#39;t a result of a failed free market, the economist said. It is simply the fallout from a climate of geopolitical uncertainty and the inability for the world to move beyond a single primary energy source.
&quot;Rather than attempting to manipulate the supply or demand for oil, governments might find it more efficient to advance the transition from fossil fuels and to subsidize those who cannot afford to quickly make that transition,&quot; Brusuelas concluded.
Benzinga&#39;s Take: In March, U.S. President Joe Biden joined 30 other countries in committing to releasing 60 million barrels of oil from strategic oil reserves, which in itself was a form of price controls. If energy prices remain elevated, the free market will eventually adjust in some way, whether that adjustment is drivers buying less gasoline, the transportation industry providing more green products and solutions or an economic recession that drives down industrial oil demand.
A line of cars waiting for fuel in June 1979. Photo by <a href="https://commons.wikimedia.org/wiki/File:1979_Gasoline_lines.jpg">Warren K. Leffler via The Library of Congress</a>.&nbsp;

Education

Why Price Controls Are Not The Answer To Soaring Gasoline Prices

Tymur Khakimov/Pexels
The Impact Of War And Sanctions
In a post earlier this month (Sanctioning Ourselves), I mentioned how our system&#39;s top names reflected the impact of Russia&#39;s invasion of Ukraine and the subsequent U.S.-led sanctions on Russia:
<blockquote>As regular readers know, our system doesn&#39;t consider the macro picture when selecting its top names. Instead, it gauges stock and options market sentiment to estimate which securities are likely to perform the best over the next six months. Nevertheless, that bottoms-up approach is painting a clear macro picture when you look at our most recent top ten.
<img alt="" src="https://static.seekingalpha.com/uploads/2022/3/12/131469-1647145786386311.png" />
Screen capture via&nbsp;<a href="https://portfolioarmor.com/" rel="dofollow">Portfolio Armor</a>&nbsp;on 3/11/2022..
Our number one name on Friday was the Teucrium Wheat Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/weat#NYSE">WEAT</a>), and two other agricultural names made the list: the Teucrium Corn Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/corn#NYSE">CORN</a>) and nitrogen fertilizer producer CF Industries Holdings, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cf#NYSE">CF</a>). Fully half of our top ten were oil and gas names including Haliburton Co. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hal#NYSE">HAL</a>), Occidental Petroleum Corp. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/oxy#NYSE">OXY</a>), and the United States Gasoline Fund LP (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/uga#NYSE">UGA</a>). Overall, our nine of our top ten names are bets on food and energy getting more expensive over the next six months.
</blockquote>
Wheat Fund Spikes On Monday
Shares of the Teucrium Wheat Fund spiked 6.41% on Monday, and it was again the top name in our system on Monday night. The reason for the spike may have been&nbsp;an article over the weekend by the New York Times&#39;s Brazil bureau chief, Jack Nicas, arguing that the war in Ukraine might cause a global food crisis. Nicas summarized the key points of his article in the Twitter thread below.&nbsp;
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In Case The Wheat Fund Pulls Back
Ideally, negotiations between Russia and Ukraine lead to peace soon. If so, it&#39;s possible that the dynamic driving wheat prices higher could reverse, causing shares of WEAT to drop. Here&#39;s a way you can hold WEAT now, while limiting your downside risk in the event that happens.
As of Monday&#39;s close, this was the optimal collar to hedge 1,000 shares of WEAT against a greater-than-20% drop by late October, while not capping your possible upside at less than 41% by then.&nbsp;
<img alt="" src="https://static.seekingalpha.com/uploads/2022/3/22/131469-1647934872042087.jpg" />
<img alt="" src="https://static.seekingalpha.com/uploads/2022/3/22/131469-16479348841970704.jpg" />
Screen captures via the&nbsp;Portfolio Armor&nbsp;iPhone app.&nbsp;
Since the income generated from selling the call leg was equal to the cost of buying the put leg, the net cost of this collar was negative. To be conservative that cost was calculated assuming you bought the puts at the ask and sold the calls at the bid (the worst end of the spread in each case). Since, in practice, you can often buy and sell options at some price between the bid and ask, you likely would have received a net credit when opening this hedge on Monday.&nbsp;
In either case, your maximum upside would have been slightly more than twice your maximum drawdown.&nbsp;

CORN

WEAT

Why The Wheat ETF Spiked On Monday: A New Report Into How Russia's Invasion Of Ukraine, And The Resulting Sanctions, Could Lead To A Global Food Crisis.

An Economic World War III
President Biden deserves credit for having so far avoided World War III. He has resisted calls to impose a no-fly zone over&nbsp;Ukraine, which would lead to war with Russia, and he has clearly signaled he has no intention of fighting Russia.&nbsp;
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But Biden has, in effect, helped launch an economic World War III, imposing unprecedented sanctions on a large and economically important country. Russia isn&#39;t an Iran or Libya. It&#39;s a continent-spanning country with a population of 145 million, and it is (or was)&nbsp;one of the world&#39;s top five exporters of oil, natural gas, nickel, wheat, coal, and other commodities. Let&#39;s breakdown why these sanctions are dangerous for us, and close with our investment approach to them.&nbsp;
What&#39;s The Endgame?
One of the biggest problems with the sanctions is that there&#39;s been no endgame articulated for them, and without an endgame, they may never end.&nbsp;The United States has had sanctions on Cuba&nbsp;since 1962.&nbsp;Obviously, the most recent, and most severe sanctions the West imposed on Russia were in response to Russia&#39;s invasion of Ukraine, but will the new sanctions be lifted if Russia withdraws its invasion force, or signs a peace treaty with the government of the Ukraine? Or will we demand Russia abandon Crimea (circled below), which is majority Russian ethnically, historically Russian, and includes Sevastopol, the home port of Russia&#39;s Black Sea Fleet?&nbsp;
<a href="https://static.seekingalpha.com/uploads/2022/3/12/131469-1647143458037731_origin.png" rel="lightbox"><img alt="" src="https://static.seekingalpha.com/uploads/2022/3/12/131469-1647143458037731.png" style="height:447px; width:640px" /></a>
&nbsp;
If our condition for lifting the sanctions is Russia abandoning Crimea, then we&#39;re likely never going to be lifting them.&nbsp;
What&#39;s The Impact?&nbsp;
Our sanctions on Russia are certainly hurting the Russian economy, and making some Russian billionaires slightly poorer, but they are unlikely to pressure Russian President Vladimir Putin into acceding to our demands. Russia is self-sufficient when it comes to food, energy, and weapons, and Putin&#39;s powerbase is Russia&#39;s&nbsp;siloviki&nbsp;(former KGB types), not its &quot;oligarchs&quot; (a term that, if we&#39;re being honest, more accurately describes American centi-billionaires such as Jeff Bezos). As an American, my primary concern is what the sanctions&#39; impact will be on us, but a secondary concern is what the impact will be on those poorer than us.&nbsp;
The immediate impact on America has been most obvious at the pump. Gasoline prices are now at&nbsp;a record high. It&#39;s worth noting here that there is a small subset of Americans that is happy about this. I spoke to one representative of this class last week, a New York venture capitalist whose firm has invested in Twitter and numerous other Silicon Valley firms you&#39;re familiar with. When I noted that President Biden had inherited $2 per gallon gas, he replied that $2 gas was &quot;a bad thing&quot; because of its impact on the climate. Easy for him to say; for low-income Americans who have to drive to their jobs and can&#39;t afford Teslas, record gas prices are a severe hardship.&nbsp;
Americans May Be Poorer; Others May Starve
As bad as the impact of continued sanctions may be on America, it will be worse on poorer countries that aren&#39;t agricultural power houses. Russia is the world&#39;s&nbsp;largest exporter&nbsp;of wheat; Russia and Ukraine combined export 25% of the world&#39;s wheat.&nbsp;
<a href="https://static.seekingalpha.com/uploads/2022/3/12/131469-16471450538444643_origin.png" rel="lightbox"><img alt="" src="https://static.seekingalpha.com/uploads/2022/3/12/131469-16471450538444643.png" /></a>
Graphic via Al Jazeera.&nbsp;
If our current economic WWIII continues, it could lead to famine in some poorer countries.&nbsp;
Diminishing American Power, Weaker Dollar
Ultimately, our sanctions may lead to diminishing American power, and a weaker dollar, as non-Western countries diversify away from the dollar to avoid having their reserves frozen by us in a future conflict.&nbsp;
<iframe height="812" src="https://seekingalpha.com/embed/19330" width="550"></iframe>
This helps explain why the Saudis and others&nbsp;declined&nbsp;Biden&#39;s calls recently. What if a future American administration (or possibly the current one) decides the Saudis are worth of the same level of sanctions as Russia, due to the conduct of their war in Yemen?&nbsp;
Investment Considerations&nbsp;
As regular readers know, our system doesn&#39;t consider the macro picture when selecting its top names. Instead, it gauges stock and options market sentiment to estimate which securities are likely to perform the best over the next six months. Nevertheless, that bottoms-up approach is painting a clear macro picture when you look at our most recent top ten.&nbsp;
<img alt="" src="https://static.seekingalpha.com/uploads/2022/3/12/131469-1647145786386311.png" />
Screen capture via&nbsp;<a href="https://portfolioarmor.com/" rel="dofollow">Portfolio Armor</a>&nbsp;on 3/11/2022.
Our number one name on Friday was the Teucrium Wheat Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/weat#NYSE">WEAT</a>), and two other agricultural names made the list: the Teucrium Corn Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/corn#NYSE">CORN</a>) and nitrogen fertilizer producer CF Industries Holdings, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cf#NYSE">CF</a>). Fully half of our top ten were oil and gas names including Haliburton Co. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hal#NYSE">HAL</a>), Occidental Petroleum Corp. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/oxy#NYSE">OXY</a>), and the United States Gasoline Fund LP (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/uga#NYSE">UGA</a>). Overall, our nine of our top ten names are bets on food and energy getting more expensive over the next six months.&nbsp;

Sanctioning Ourselves: American-Led Sanctions On Russia Lead To Higher Prices At Home. Inflationary Investing Considerations

Crude oil prices recently reached their highest levels in 13 years after&nbsp;President Joe Biden <a href="https://www.benzinga.com/government/22/03/26044413/us-bans-russian-oil-imports-in-response-to-ukraine-invasion-what-you-need-to-know">banned all imports of Russian fossil fuels</a> in response to the country&#39;s invasion of Ukraine. While crude oil is the main driver of global market uncertainty, a number of other commodities have also been extremely volatile since the Ukraine conflict began.
Unfortunately, commodities were already experiencing significant upward pricing pressure even before Russia entered Ukraine thanks to lingering pandemic supply chain issues, booming global demand and U.S. inflation levels at roughly 40-year highs. Here are five commodity ETFs that investors can buy if they believe inflation is here to stay.
United States Oil ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/uso#NYSE">USO</a>) 
The United States Oil ETF is by far the most popular way for investors to trade West Texas intermediate crude oil prices. The fund tracks front-month light sweet crude oil futures contracts, making it subject to severe contango. That contango means the fund significantly lags the price of WTI crude oil in the long-term, but it is an excellent way for traders to play oil prices in the short-term.
The USO fund has a 0.79% expense ratio, $3.2 billion in assets under management and a three-month average daily trading volume of 7.3 million, providing plenty of liquidity for investors. The USO fund is already up 47% year-to-date.
Energy Select Sector SPDR Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xle#NYSE">XLE</a>) 
The Energy Select Sector SPDR Fund is another option that provides diversified exposure to oil, gas and other energy prices that might be a more appealing option than the USO fund for long-term investors. The XLE fund provides investors with exposure to 23 different S&amp;P 500 energy <a href="https://www.benzinga.com/money/best-sectors-to-invest-in-right-now/">sector</a> stocks, including top holdings Exxon Mobil Corp (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xom#NYSE">XOM</a>), Chevron Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cvx#NYSE">CVX</a>) and EOG Resources Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/eog#NYSE">EOG</a>).
Because it invests in stocks and not futures, the XLE doesn&#39;t suffer from contango like the USO fund. It also has a miniscule 0.1% expense ratio and pays a generous 3.7% dividend.
Also Read:&nbsp;<a href="https://www.benzinga.com/general/entertainment/22/03/26026096/5-turnaround-ceos-who-saved-major-corporations">5 Turnaround CEOs Who Saved Major Corporations</a>
Barclays iPath Bloomberg Nickel Subindex Total Return ETN (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jjn#NYSE">JJN</a>) 
The Barclays iPath Bloomberg Nickel Subindex Total Return ETN is the best way for traders to play the extreme 2022 volatility in nickel prices. Gold prices are up 15.5% in the past year, but nickel prices have skyrocketed more than 200% in that time. Like the USO, the JJN continually rolls over nickel futures contracts, making it susceptible to underperformance due to contango over the long-term.
The fund has a 0.45% expense ratio, an AUM of $121.7 million and decent liquidity with a three-month average daily trading volume of more than 53,000 shares. The JJN fund is up 63.9% year-to-date.
Teucrium Wheat Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/weat#NYSE">WEAT</a>) 
The price of wheat recently surged above $12 per bushel for the first time in history. Russia and Ukraine account for a combined 29% of the global wheat trade. The Teucrium Wheat Fund is the best way for investors to trade the wild swings in wheat prices.
Like other ETFs that rely on futures contracts, the WEAT ETF suffers from contango. However, Teucrium agricultural funds attempt to minimize the impact of contango by spreading its futures holdings across multiple maturities.
The WEAT fund has a pricey 1.91% expense ratio, $86.5 million in and a three-month average daily trading volume of 2 million, providing plenty of liquidity for investors. The WEAT fund is up 44.7% year-to-date.
United States Gasoline Fund LP (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/uga#NYSE">UGA</a>) 
American drivers enraged by gas prices can help alleviate their pain at the pump by holding the United States Gasoline Fund. The UGA fund&#39;s futures-based strategy makes it subject to contango, but it is a great way for short-term traders to play the extreme volatility of a U.S. gasoline price shock.
U.S. gas prices recently topped $4 per gallon, and Gas Buddy is predicting U.S. gas prices will average $3.99 for the full year. The UGA fund has even outperformed the USO fund in 2022, gaining 50.5% on the year.

Long Ideas

iPath Dow Jones UBS Nickel Subindex Total Return ETN

5 Best Commodity ETFs To Buy As Oil Prices Soar

The initial surge in crude oil prices following Russia&#39;s invasion of Ukraine on Thursday subsided late in the day, and drivers and analysts now have some optimism that the Ukraine conflict may not have as big of an impact at the pump as some had feared.
Oil Volatility: After trading as high as $98.86 per barrel on Thursday morning, WTI crude oil prices were back down to $92.14 on Friday after the market digested the impact of the Russian aggression and the new round of sanctions imposed on Russia by the U.S. and other nations.
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/02/25811871/how-the-markets-are-reacting-to-russias-invasion-of-ukraine">How The Markets Are Reacting To Russia&#39;s Invasion Of Ukraine</a> 
The national average gasoline price on Friday <a href="https://gasprices.aaa.com/">is $3.572</a> per gallon, up 4.4 cents from a week ago. At one point on Thursday, gasoline spot prices were up 17 cents on the day.
Still, gasoline prices continue to steadily rise in 2022, and the Ukraine conflict is likely to exacerbate the situation. U.S. gas prices averaged just $2.678/gal a year ago.
Russia&#39;s Impact: Russia is the second-largest oil producer in the world behind only the U.S. <a href="https://www.usatoday.com/story/money/2022/02/23/gas-prices-rising-russia-ukraine/6912371001/">About 7%</a> of U.S. gross petroleum imports come from Russia, and the U.S. gets about 3% of its oil from Russia.
While oil and gas prices pulled back from highs on Thursday, the Oil Price Information Service is projecting U.S. average gas prices will hit $4/gal in the second quarter of 2022.
GasBuddy analyst Patrick De Haan said Friday that yesterday&#39;s U.S. gasoline demand was the second-highest ever recorded for a Thursday.
&quot;According to GasBuddy data, Thursday U.S. gasoline demand surged 17.3% from the prior Thursday and was 21.1% above the average of the last four Thursdays,&quot; <a href="https://twitter.com/GasBuddyGuy/status/1497193332874879011">De Haan said</a>.
&quot;It&#39;s a good sign that the large jump in oil this morning has faded, and offers a glimmer of hope that increases in coming weeks and months may not be as astronomical as feared, but the situation remains fluid,&quot; he said on Thursday.
The United States Oil ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/uso#NYSE">USO</a>) traded slightly lower on Friday and is well off its Thursday morning peak levels, but it remains up 4% overall in the past five days and 54.6% in the last year. The United States Gasoline Fund LP (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/uga#NYSE">UGA</a>) is up 5% in the last five days and 60.2% in the last year.
Benzinga&#39;s Take: It&#39;s certainly irritating to U.S. drivers that gas prices have risen by nearly 90 cents per gallon in the last year, especially with spring and summer travel season just around the corner. Unfortunately, those prices will likely continue to rise in the near-term, but the Oil Price Information Service is projecting gas prices will fall back to $3.30/gal in the second half of 2022.

Gas Prices: Why Russia's Invasion Of Ukraine Will Increase Your Costs At The Pump

United States Gasoline Fund LP (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UGA#NYSE">UGA</a>) shares experienced unusual options activity on Friday. The stock price moved up to $37.61 following the option alert. 
<ul>
<li>Sentiment: NEUTRAL</li>
<li>Option Type: TRADE</li>
<li>Trade Type: CALL</li>
<li>Expiration Date: 2021-08-20</li>
<li>Strike Price: $35.00</li>
<li>Volume: 201</li>
<li>Open Interest: 257</li>
</ul>
<h2>Three Indications Of Unusual Options Activity</h2>
One way options market activity can be considered unusual is when volume is exceptionally higher than its historical average. The volume of options activity refers to the number of contracts traded over a given time period. The number of unsettled contracts that have been traded, but not yet closed, is called open interest. These contracts are not yet closed because a buyer has not purchased the contract, or a seller has not sold it.
The trading of a contract with an expiration date in the distant future is another sign of unusual activity. Generally, additional time until a contract expires increases the potential for it to reach its strike price and grow its time value. Time value is important in this context because it represents the difference between the strike price and the value of the underlying asset. 
"Out of the money" contracts are unusual because they are purchased with a strike price far from the underlying asset price. "Out of the money" occurs when the underlying price is under the strike price on a call option, or above the strike price on a put option. Buyers and sellers try to take advantage of a large profit margin in these instances because they are expecting the value of the underlying asset to change dramatically in the future. 
<h2>Understanding Sentiment</h2>
Options are "bullish" when a call is purchased at/near ask price or a put is sold at/near bid price. Options are "bearish" when a call is sold at/near bid price or a put is bought at/near ask price. 
These observations are made without knowing the investor's true intent by purchasing these options contracts. The activity is suggestive of these strategies, but an observer cannot be sure if a bettor is playing the contract outright or if the options bettor is hedging a large underlying position in common stock. For the latter case, bullish options activity may be less meaningful than the exposure a large investor has on their short position in common stock.
<h2>Trading Options With These Strategies</h2>
Unusual options activity is an advantageous strategy that may greatly reward an investor if they are highly skilled, but for the less experienced trader, it should remain as another tool to make an educated investment decision while taking other observations into account.
For more information to understand options alerts, visit <a href="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts" title="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts">https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts</a>

Movers

Understanding United States Gasoline Fund LP's Unusual Options Activity

On <a href="https://www.cnbc.com/video/2021/04/09/final-trades-dufry-uga-aapl-dal.html">CNBC&#39;s &quot;Fast Money Final Trades,&quot;</a> Barbara Ann Bernard said she likes Dufry (OTC: <a class="ticker" href="https://www.benzinga.com/stock/dufry#OTC">DUFRY</a>) and thinks it could double in three years.
James McDonald is a buyer of United States Gasoline Fund LP (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/uga#NYSE">UGA</a>).
Steve Grasso wants to buy Apple Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>).
Guy Adami would be a buyer of Delta Air Lines, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dal#NYSE">DAL</a>) going into earnings.
&nbsp;

AAPL

DUFRY

'Fast Money' Picks For April 12

Gas prices have been creeping higher throughout the holiday season, and the latest projections from GasBuddy suggest the trend could continue throughout 2018. Gas prices will likely be the highest this year that they have been since 2014, said GasBuddy analyst Patrick DeHaan.&nbsp;
GasBuddy projects U.S. gas prices will increase an average of 19 cents per gallon in 2018 and average $2.57 on the year. Prices will be nowhere near record levels and will remain below $3 in most of the country barring any major disruption, DeHaan said.
Major cities such as Chicago, Los Angeles and New York could be consistently shelling out $3 per gallon this year, according to the forecast.&nbsp;
For Americans wondering why gas prices are on the rise, DeHaan said OPEC&rsquo;s production cuts are the primary driver. OPEC cuts have lowered oil inventories by nearly 50 million barrels compared to one year ago.
&ldquo;Yet, understanding many factors, including OPEC, fuel taxes, the economy and their impact on supply and demand is integral to providing a thorough and balanced outlook on gas prices for 2018,&rdquo; DeHaan said.
Drivers should also be aware that the <a href="https://www.benzinga.com/etfs/specialty-etfs/17/07/9840579/attention-u-s-drivers-state-lines-can-be-danger-zones-for-gas-pric">price spreads</a> among different gas station competitors have also been on the rise, meaning drivers could be paying more for gasoline if they don&rsquo;t shop around.
&ldquo;It&rsquo;s become nothing short of crazy how one station might sell gasoline 20-40 cents lower or higher than a nearby competitor,&rdquo; he said.
<a href="https://www.cnbc.com/2018/01/02/oil-price-crude-could-hit-80-by-end-of-2018.html">One group</a> of investors are perfectly happy to see gasoline and oil prices on the rise. In the past six months, the United States Oil Fund LP (ETF) (NYSE: <a class="ticker" href="/stock/uso#NYSE">USO</a>) is up 29.2 percent and the United States Gasoline Fund, LP (NYSE: <a class="ticker" href="/stock/uga#NYSE">UGA</a>) is up 31.8 percent.
Related Links:
<a href="https://www.benzinga.com/general/education/17/12/10950992/this-day-in-market-history-opec-raises-oil-price-to-7-per-barrel">This Day In Market History: OPEC Raises Oil Price To $7 Per Barrel</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/12/10942745/the-end-of-the-year-oil-trade-is-spreading-to-leveraged-etfs">The End-Of-The-Year Oil Trade Is Spreading To Leveraged ETFs</a>

Pains At The Pump, Gains For Oil Investors: The 2018 Gas Outlook

Hurricane Harvey has triggered a unique phenomenon in the U.S. oil and gas industry. Since the devastating flooding in South Texas and Louisiana has disrupted far more crude oil refining capacity in the region than production capacity, the net result of the storm has been less crude oil being refined and less gasoline being produced.
In other words, an already bloated crude oil supply is getting even larger, while gasoline supply is shrinking. As a result, gasoline and crude oil prices have been headed in opposite directions.
According to <a href="http://fuelinsights.gasbuddy.com/">GasBuddy</a>, the national average U.S. gas price Thursday morning was $2.46/gal, up 4.6 percent from its average price a week ago. At the same time, WTI crude oil is trading at just $46.14/bbl, down 2.5 percent from a week ago.
According to LPL Financial, Harvey <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/08/9996974/petroleum-paradox-explained-why-crude-prices-are-droppin">temporarily disabled</a> half of the oil-refining capacity in Texas, or roughly 15 percent of the nation&rsquo;s total capacity. Half of Texas&rsquo;s refining capacity is equivalent to roughly 2.75 million barrels per day. Earlier this week, Barclays estimated that Harvey knocked out roughly <a href="https://money.usnews.com/investing/stock-market-news/articles/2017-08-30/hurricane-harvey-hits-oil-stocks-but-some-harder-than-others">500,000 barrels</a> per day of crude oil production, well short of impact is had on refining.
But while heavy rains have finally moved on from most parts of Texas, investors shouldn&rsquo;t expect the oil market to return to normal overnight.
&ldquo;The impact could linger for several weeks or longer, depending on how long it takes Texas refiners to return to normal operations,&rdquo; GasBuddy analyst Patrick DeHaan said earlier this week.
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/08/9982630/how-will-harvey-impact-oil-and-gasoline-prices">How Will Harvey Impact Oil And Gasoline Prices?</a>
Unfortunately for oil investors, Loop Capital Management analyst <a href="https://www.tipranks.com/analysts/stephen-gengaro">Stephen Gengaro</a> says it's still too early to accurately assess the full impact of the storm.
&ldquo;In general, we believe Hurricane Harvey will reduce inventory draws by about 1.5 mbpd over at least the next few weeks with a smaller headwind persisting for several weeks (at least) beyond that,&rdquo; Gengaro wrote on Thursday.
<a href="https://www.tipranks.com/analysts/stephen-gengaro"><img src="/files/images/2017/August/31/tipranks.png" width="350" height="35" alt="tipranks.png" /></a>
In the meantime, the divergence between oil and gas prices is likely to continue. In the past five days, the United States Oil Fund LP (ETF) (NYSE: <a class="ticker" href="/stock/uso#NYSE">USO</a>) is down 5.0 percent, while the United States Gasoline Fund, LP (NYSE: <a class="ticker" href="/stock/uga#NYSE">UGA</a>) is up 7.0 percent.
________ 
Image Credit: By R. Crap Mariner from Houston, USA [CC BY 2.0 (<a href="http://creativecommons.org/licenses/by/2.0" title="http://creativecommons.org/licenses/by/2.0">http://creativecommons.org/licenses/by/2.0</a>)], via Wikimedia Commons

Topics

Events

How Hurricane Harvey Has Impacted Gas Prices

Flooding from <a href="https://www.cnbc.com/2017/08/27/hurricane-harvey-refineries-shutting-down.html">Hurricane Harvey</a> is devastating the Houston and Galveston areas of Texas, major hubs for U.S. oil refining. Royal Dutch Shell plc (ADR) (NYSE: <a class="ticker" href="/stock/rds-a#NYSE">RDS-A</a>) (NYSE: <a class="ticker" href="/stock/rds-b#NYSE">RDS-B</a>), ExxonMobil Corporation (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>) and other major refiners have already shut down more than 1 million barrels per day of refining capacity in the region.
Although South Texas is also a center for oil and gas production as well, the Bureau of Safety and Environmental Enforcement said on Sunday that only about 378,000 barrels per day of production have been disrupted from <a href="https://www.benzinga.com/news/17/08/9973107/generators-to-insurers-trading-tropical-storms">the storm</a>.
In other words, at least at this point, lost refining capacity far exceeds lost production, meaning the nations refining logjam is set to get even worse until Houston plants get back online. From a practical standpoint, less refining capacity will likely mean higher gasoline prices and lower oil prices, a dynamic that is already playing out in the market Monday morning.
The national U.S. gasoline price on Monday stands at $2.38 per gallon, up more than 5 cents from a week ago. WTI crude oil prices were down 0.8 percent in early Monday trading to under $48/bbl.
&ldquo;Gas prices are up in many places and motorists should be gearing up for more in the coming weeks, thanks to Hurricane Harvey inundating significant refineries along the Texas coastline, leading to closures and tilting the delicate balance of supply and demand,&quot; said Patrick DeHaan, senior petroleum analyst for GasBuddy.
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/08/9976610/a-host-of-upgrades-for-offshore-oil-companies-as-rbc-see">A Host Of Upgrades For Offshore Oil Companies As RBC Sees A Recovery</a>
Drivers shouldn&rsquo;t expect the pain at the pump to go away anytime soon, even if the rainfall ceases in Texas.
&ldquo;The impact could linger for several weeks or longer, depending on how long it takes Texas refiners to return to normal operations,&rdquo; DeHaan said.
In the meantime, oil and gas traders will be watching the weather closely and keeping an eye on both the United States Oil Fund LP (ETF) (NYSE: <a class="ticker" href="/stock/uso#NYSE">USO</a>) and the United States Gasoline Fund, LP (NYSE: <a class="ticker" href="/stock/uga#NYSE">UGA</a>).
Disclosure: The author is long RDS.B.
 _______ 
Image Credit: By Jill Carlson (jillcarlson.org) from Roman Forest, Texas, USA - Hurricane Harvey Flooding - 8/26/17 to ?, CC BY 2.0, <a href="https://commons.wikimedia.org/w/index.php?curid=61979705">via Wikimedia Commons</a>

RDS-A

RDS-B

RDS.A

How Will Harvey Impact Oil And Gasoline Prices?

Considering the generally high cost of air conditioning, the fact that New Mexico has the lowest average monthly energy bill of any state may come as a surprise.
But perhaps more surprising is that its trick isn&rsquo;t living by candlelight or killing the cooling system. It&rsquo;s living by coal.
In fact, the state&rsquo;s <a href="https://howmuch.net/articles/electric-bill-cost-by-state">primary energy source</a> is a common factor among the nation&rsquo;s three lowest bill payers. New Mexico averages a mere $76, while Utah averages $83 and Colorado $84.
<h3>The United States Of Coal</h3>
Despite pushback by environmentalists and <a href="https://www.benzinga.com/news/17/01/8859235/solar-power-is-already-cheaper-than-coal-in-several-countries">threats </a>levied by solar competitors, coal companies appear to be <a href="https://www.benzinga.com/trading-ideas/long-ideas/16/10/8525403/somehow-coal-is-the-best-energy-investment-of-2016">holding ground</a> in the sector. Companies like Peabody Energy Corporation (NYSE: <a class="ticker" href="/stock/btu#NYSE">BTU</a>), Arch Coal, Inc. Class A (NYSE: <a class="ticker" href="/stock/arch#NYSE">ARCH</a>) and Cloud Peak Energy Inc. (NYSE: <a class="ticker" href="/stock/cld#NYSE">CLD</a>) provide the primary energy source in 19 states.
In the first quarter of 2017, the United States generated more energy using coal (292.5 million megawatt-hours) than any other resource, including natural gas (262.5 million megawatt-hours) and nuclear (202.3 million megawatt-hours), according to the <a href="https://www.eia.gov/electricity/data/browser/#/topic/0?agg=2,0,1&amp;fuel=vtvv&amp;geo=g&amp;sec=g&amp;linechart=ELEC.GEN.ALL-US-99.Q~ELEC.GEN.COW-US-99.Q~ELEC.GEN.NG-US-99.Q~ELEC.GEN.NUC-US-99.Q~ELEC.GEN.HYC-US-99.Q~ELEC.GEN.WND-US-99.Q~ELEC.GEN.TSN-US-99.Q&amp;columnchart=ELEC.GEN.ALL-US-99.Q~ELEC.GEN.COW-US-99.Q~ELEC.GEN.NG-US-99.Q~ELEC.GEN.NUC-US-99.Q~ELEC.GEN.HYC-US-99.Q~ELEC.GEN.WND-US-99.Q&amp;map=ELEC.GEN.ALL-US-99.Q&amp;freq=Q&amp;ctype=linechart&amp;ltype=pin&amp;rtype=s&amp;maptype=0&amp;rse=0&amp;pin=">U.S. Energy Information Administration</a>.
The sector has swelled under the Trump administration, which <a href="https://www.benzinga.com/news/17/06/9583806/trump-keeps-his-promise-to-add-coal-jobs-though-not-to-the-degree-his-epa-head-cl">takes credit</a> for a coal mining <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/04/9269095/coal-etf-still-hoping-trump-delivers">workforce expansion</a> of 1,000 between January and May.
Meanwhile, Market Vectors-Coal ETF (NYSE: <a class="ticker" href="/stock/kol#NYSE">KOL</a>) is up 21.4 percent year-to-date, while United States Oil Fund LP (ETF) (NYSE: <a class="ticker" href="/stock/uso#NYSE">USO</a>) and United States Gasoline Fund, LP (NYSE: <a class="ticker" href="/stock/uga#NYSE">UGA</a>) are down 14.2 percent and 15.1 percent, respectively.
<h3>The After-Thoughts</h3>
With an average monthly bill of $103 across its 19 reliant states, coal is certainly appealing relative to other options.
Natural gas and nuclear support the states with the most expensive energy bills, with Alabama paying $146 and Connecticut $142 on natural gas, and South Carolina paying $143 and Maryland $141 on nuclear.
Those particular resources are associated with higher costs across the board, with only petroleum liquid correlated with higher spending.
<ul>
<li>Other renewables: 1 state averaging $86.</li>
<li>Hydroelectric: 5 states averaging $97.40.</li>
<li>Natural gas: 20 states averaging $118.90.</li>
<li>Nuclear: 5 states averaging $121.20.</li>
<li>Petroleum liquid: 1 state averaging $139.</li>
</ul>
Related Links:
<a href="https://www.benzinga.com/news/17/02/9106510/coal-companies-lobby-for-clean-energy-subsidies">Coal Companies Lobby For Clean Energy Subsidies</a>
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/07/9794059/gordon-johnson-inorganic-demand-driving-us-solar-bull-ma">Gordon Johnson: Inorganic Demand Driving US Solar Bull Market</a>

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United States Gasoline Fund LP

Overview

United States Gasoline Fund LP (ARCA:UGA), Quote.Headers.trade-ideas