Regardless of Pandemic, War, or Inflation, the Global Refinery Cycle Follows a Seasonal Pattern
What Does This Mean for Gasoline Marketers?
Wholesale gasoline inventories usually peak in the last few weeks of February. Then, refineries start to perform maintenance, also known as turnaround. Spring turnaround reduces refining capacity just when the market begins to anticipate an increase in gasoline demand due to the summer driving season.
This causes gasoline prices at the terminal to move higher. When this happens, retailers’ street margins get squeezed.
Retail gasoline marketers have a seasonal problem. The robust profit margins they often enjoy in the late autumn and winter can deteriorate as Spring arrives. This Q1/Q2 margin squeeze does not occur every year of course, but the pressure on profit margins between New Year’s Day and Memorial Day can be severe.
What can you do about it?
The gasoline retailer can establish hedge positions to offset this expected margin squeeze. POWERHOUSE works with clients across the country to develop customized strategies to protect margins.
Each company operates in unique conditions so contact us to discuss how we can help your company protect margins and grow your business.
David Thompson, CMT Executive Vice President
(202) 333-5380
ICE IM: dthompson17
Futures Disclaimer
Futures trading involves significant risk and is not suitable for everyone. Transactions in securities futures, commodity and index futures and options on futures markets carry a high degree of risk. The amount of initial margin is small relative to the value of the futures contract, meaning that transactions are heavily “leveraged”. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit: this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the clearing firm to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit.
Powerhouse Trading Disclaimer
Powerhouse is a branch office of Coquest Incorporated, a registered introducing broker. Coquest Incorporated, an affiliate of Coquest, or a company with common ownership with Coquest may act as a principal to a block trade with [Client]. When acting as principal, Coquest will be a counterparty to the block trade and (i) will not be acting as Client’s broker or agent and (ii) is not under any obligation to act in [Client]’s best interest.