Oil prices began February at $73/barrel. After an initial announcement of tariffs on imports from Canada and Mexico, the Trump administration quickly decided to pause for 30 days. Additional tariffs and sanctions were placed on China and Iran also. These actions caused oil prices to retreat for the near term toward $70/barrel, but fears of a trade war are building. The following graph shows the daily price movements over the past three months:
Mid-February, oil prices were on the seesaw. The pause in tariffs gave fuel prices room to ascend, but new speculation that a peace deal agreement between Russia and Ukraine could be close offset increases. The thought of lightening sanctions on Russian oil would return more supply to the market and cause prices to drop.
The graphs below show the movement of crude oil (converted to gallons) along with wholesale and retail fuel prices over the trailing 15 months:
In February, diesel profit margins were flat month over month due to both wholesale and retail prices rising on similar trajectories. On the other hand, gas saw retail climb faster than wholesale, giving a slight boost to suppliers’ profit margins. The following graph shows the retail margins over the trailing 15 months:
According to AAA, the national average retail price for gas was unchanged from last month, finishing February at $3.11/gallon. The national average price for diesel finished at $3.67/gallon, which is also where the product finished in January. It was a relatively uneventful month for fuel prices at the pump.
While February wasn’t as volatile a month for fuel compared to January, there are headwinds approaching. President Trump reimposed tariffs on Canada and Mexico, taking effect on March 4th. OPEC+ still needs to decide if they will continue forward with their plan or adjust due to pressure from the U.S. to help lower prices. For now, oil finished the month just under $70/barrel.
Sokolis currently anticipates that oil prices will continue to range between $65-75/barrel, but that could quickly change with many ongoing developments that will influence prices.
