Gasoline futures are trading as if the U.S. economy is about to hit the brakes, according to Goldman Sachs Group Inc.
Contracts for delivery in the summer months are currently priced less than $20 a barrel higher than crude oil. If those premiums were realized, they would be the smallest since 2010, when the U.S. unemployment rate was above 9 percent.
That’s too low, Goldman analyst Damien Courvalin said in a research note Wednesday. Last year, gasoline’s premium fluctuated from $23 to $33 a barrel above crude as American drivers drove a record number of miles.
Gasoline’s premium has slipped this year as record production boosted inventories to highest level since at least 1990. Refineries have already started cutting back output, though, and several will soon temporarily shut down for maintenance.
That should boost gasoline enough that the only way summer premiums could be as low as they’re currently priced is if the U.S. economy began to shrink, causing driving demand to fall, Courvalin said.
“The demand implied by such margins would be consistent with a U.S. recession, which our U.S. economist team estimates has only a 15 percent to 20 percent probability of occurring,” Courvalin said in the note.
Gasoline for March delivery added 1.5 percent to $1.0181 a gallon on the New York Mercantile Exchange by 11:55 a.m. Singapore time.