Gasoline Analysis Report 5/15/20 – Prices Are Off The Lows & Going Higher

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About 80% of Costco’s gross margin and 70% of its operating income come from its membership fees and roughly 90% of their members are renewing their annual membership. We are talking memberships representing 50 million households and 92 million cardholders.

Customers usually make up their membership fees by month nine due to all the savings. Costco’s prices are on average 30% lower than the larger supermarket chains. Costco uses their economy of scales to negotiate the lowest prices possible, then pass those savings to the customer.

So what does Costco have to do with gasoline prices...because I was getting use to paying $1.69 for a gallon of gasoline?

The stay-at-home orders promulgated by state and local governments drove U.S. demand for gasoline down by around 30% over the six-week period between mid-March and the end of April.

On April 12, gasoline purchases were down 62%, compared to March 13, 2019, the day last year that exhibited the greatest demand for gasoline. Demand in the last week of April was up 22% compared to the week of April 5, the weakest period for U.S. demand this year.

GasBuddy expects demand to continue rising as more states reopen and employees return to work. The analysts even expect summer travelers to begin hitting U.S. highways. School closings for the remainder of the academic year may pull some travel forward.

Will gas prices rise? Patrick DeHaan, head of petroleum analysis at GasBuddy, commented, “The increase in fuel demand will heavily rely on how quickly additional states reopen.

Source

Monthly Chart (Curve Timeframe) - the monthly supply is at $2.20 and monthly demand is at $0.50.

Weekly Chart (Trend Timeframe) – the trend is down with upside momentum.

Daily Chart (Entry Timeframe) – the chart suggests to go long on a pull back to the daily demand at $0.7320 with a target just below the daily supply.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

Posted Using LeoFinance



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