Gasoline ETFs Edge Lower After Summer Spike

November 14th at 7:00am by Tom Lydon

Gasoline ETFs have pulled back from the mutliyear high reached in October while trading volume in the products has also trailed off.

Still, gasoline futures rose 3% at the close of last week, implying prices could rise again on tight demand. Exchange traded funds can help hedge the hit to consumers’ pockets, however, analysts are calling this a short term trend.

“In the short-term, gasoline consumption in the Northeast is recovering much faster than refining capacity coming back online,” Stephen Johnston, a partner at Agcapita Partners, said in a report. [Five ETF Sectors to Watch After Hurricane Sandy]

The recent uptick in gasoline futures prices is reactionary to Superstorm Sandy, as U.S. supplies were ample before the storm. Prices had just started to settle lower prior to the disaster in the Eastern U.S. Until electrical power is available to the Northeast, refiners can not resume production. Should prices rise higher in the region, supplies will be gathered from other parts of the U.S. to control any price spikes, reports Trang Ho for Investor’s Business Daily.

The center of the storm was Philadelphia, a major center of gasoline production. Refineries, ports for tankers and pipelines to the region are currently shut down. Short-term there will be a reduction of gasoline production for this part of the country, reports Eric Dutram for Zacks.

The United States Gasoline (NYSEArca: UGA) has crept a bit higher recently after falling October. This is the largest gasoline ETF tracking the price of crude oil futures, and the only fund to give exposure to the commodity. [Four ETFs for an Oil Rebound]

United States Gasoline

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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