February 25, 2021

Why are gas prices spiking?

By Chad Besch, MaxYield Energy Team Leader

Did anyone else notice gas prices have gone up a little???

The big spike up has been caused by basis levels increasing after some refinery issues in the Chicago area got traders worried, or downright panicking, about supply in the Midwest.

Basis levels are a reflection of local supply and demand and in this case the spike, in theory, would slow demand and entice suppliers to ship more gallons to the Midwest to make up for the shortage. One could argue the move is a bit extreme but then again when is the last time traders ever overdid anything……

There were a few signs late last week that things could start to correct next week. Will $4 gas will be short lived?

To read more thoughts on the energy markets and to learn more about the recent run-up in prices, go to Chad Besch’s energy commentary at www.MaxYieldEnergy.com.



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