Gasoline ETF in Focus Ahead of Memorial Day Travel
As Memorial Day weekend approaches, American drivers are experiencing a welcome reprieve at the gas station. Gasoline prices are projected to be among the lowest in recent decades for the holiday, providing both consumers and investors reasons to cheer.According to an analysis by GasBuddy, the average gallon of gas this Memorial Day weekend is expected to be around $3.08, down from $3.58 a year ago. This marks the cheapest rate at the gas station since 2021 and brings the pure-play United States Gasoline ETF UGA, which allows investors to make a direct play on the commodity of RBOB gasoline, in focus. Lower gasoline prices are encouraging more Americans to travel during the holiday weekend. AAA projects that 45.1 million people will travel at least 50 miles from home, setting a new record for Memorial Day weekend travel. Of these travelers, approximately 87% will be driving, taking advantage of the more affordable fuel costs.The increased travel activity is expected to boost consumer spending in various sectors, including hospitality, dining, and retail, as travelers allocate savings from fuel costs to other expenses (read: 4 Leisure ETFs Poised to Gain From U.S. Summer Travel Revival).While gasoline prices are lower currently, high travel demand during the Memorial Day weekend could lead to increased consumption, potentially influencing gasoline futures and UGA's performance.
United States Gasoline ETF is designed to track the movements of gasoline prices in percentage terms. The benchmark futures contract is the contract on gasoline as traded on the NYMEX. If the near-month contract is within two weeks of expiration, the benchmark will be the next-month contract to expire. United States Gasoline ETF is illiquid, with a daily trading volume of about 16,000, suggesting that investors have to pay beyond the annual fee of 1.17% per year. The fund has managed assets of $72.7 million (see: all the Energy ETFs).As traders need to roll from one futures contract to another, the fund is susceptible to roll yield. Notably, roll yield is positive when the futures market is in backwardation and negative when the futures market is in contango. Basically, if the price of the near-month contract is higher than the next-month futures contract, then it is backwardation, and the opposite holds true in contango.
United States Gasoline ETF is poised to benefit from the prolonged period of backwardation, where later-dated contracts are cheaper than near-term contracts. Currently, the gasoline market is in backwardation, which is favorable for the commodity and the gasoline ETF UGA. As such, the fund continues to roll over next-month futures contracts at a lower price, thereby making profits. This signals continued bullishness in the commodity. This trend is likely to persist at least in the near term, acting as the biggest catalyst for the commodity.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNBC
6 minutes ago
- CNBC
The latest CPI report showed some softening in inflation. What investors are saying
Wall Street got a favorable inflation report on Wednesday, giving equities a boost. The consumer price index rose 0.1% in May , slightly less than the 0.2% increase economists polled by Dow Jones anticipated. So-called core CPI, which strips out volatile food and energy prices, increased by 0.1% — also less than expected. Stocks reacted positively, with S & P 500 futures erasing an earlier decline to trade about 0.2% higher. Some investors noted continued uncertainty around the Federal Reserve's interest rate outlook, despite the latest price report. Here's how some investors, economists and strategists reacted to the news: Chris Rupkey, chief economist at FWDBonds: "Net, net, the inflation shock wave from more costly imported goods has yet to arrive on American shores. Today's consumer inflation report is a real head-scratcher for economists as they ponder why the trade war hasn't set off another inflation outbreak yet with core goods prices sitting on store shelves seeing no change in May." Alexandra Wilson-Elizondo, global co-CIO of multi-asset Solutions at Goldman Sachs Asset Management: "Inflation in May was lower than anticipated, suggesting the tariffs aren't having a large immediate impact because companies have been using existing inventories or slowly adjusting prices due to uncertain demand. While we might see some price increases on goods later, service prices are expected to remain stable, suggesting any rise in inflation is likely to be temporary." Ian Lyngen, head of U.S. rates at BMO Capital Markets: "CPI surprised on the downside across the board. … The yield curve is bull steepening as the slower trajectory of inflation has firmed rate cut expectations for later this year. On the margin, it is also supportive of next week's [Federal Reserve Summary of Economic Projections] signaling 50 bp of cuts in 2025." Ryan Weldon, investor director and portfolio manager at IFM Investments: "The softer services inflation lends itself to a slowing economy in the face of continued tariff anxiety and will support the Fed to come out of their wait-and-hold approach sooner. However, the Fed will still want to see several months of consistent inflation and jobs data and have more clarity on the Trump administration's tariff policy before resuming cuts." Chris Zaccarelli, chief investment officer at Northlight Asset Management: "With lower-than-expected numbers across the board (with the exception of headline YoY, which stayed constant), and a trade deal with China that was agreed to in London, the narrative around tariff-induced inflation should subside. However, CPI remains above 2% and even though the tariff rates are going to be less than originally feared, after they are implemented they will further increase the cost of goods." Skyler Weinand, chief investment officer at Regan Capital: "Wednesday's weaker-than-expected CPI opens the door to a Fed rate cut in September, since it's clear that the inflation data continues to move in the right direction even as we deal with tariff uncertainty. While employment is strong and the economic effects from tariffs are yet to be determined, the Fed would like to start easing again in the not too distant future to get in front of a possible recession in 2026" Peter Boockvar, chief investment officer at Bleakley Financial Group: "Bottom line, a sigh of relief on the lower than expected inflation stats just as we search for where tariffs will work its way through the supply chain and end customer."
Business Upturn
8 minutes ago
- Business Upturn
Donald Trump confirms US-China deal done, says rare earth deal and 55% tariffs finalised
Donald Trump touts 55% tariffs and rare earth supply in pending China deal By News Desk Published on June 11, 2025, 17:56 IST Last updated June 11, 2025, 17:57 IST Former U.S. President Donald J. Trump on Tuesday announced via social media that a new deal with China has been reached, pending final approval from both himself and Chinese President Xi Jinping. According to Trump, the agreement includes upfront Chinese supply of 'full magnets' and 'any necessary rare earths' to the U.S. In return, the U.S. will uphold previously agreed terms, which Trump said include allowing Chinese students to continue studying at American colleges and universities — a relationship he described as 'always been good with me!' Trump emphasized that under the new deal, the U.S. will receive a combined total of 55% in tariffs, while China will get 10%. 'Relationship is excellent!' Trump declared in the post, adding thanks for attention to the matter. The post, shared on June 11, 2025, at 8:04 AM, comes amid ongoing geopolitical and trade tensions between the world's two largest economies. No official confirmation has yet been released by Chinese authorities or the U.S. State Department. News desk at
Business Wire
8 minutes ago
- Business Wire
Caring Together: Carefull to Partner with the Alzheimer's Association to Protect Families
NEW YORK--(BUSINESS WIRE)-- Carefull, the first financial safety platform built specifically for older adults and their families, is proud to support the Alzheimer's Association in raising awareness of the financial warning signs of cognitive decline and equipping families with tools to take early, protective action to prevent fraud and mistakes. Carefull is proud to support the care, services and research initiatives of the Alzheimer's Association. The Alzheimer's Association will provide information and resources aimed at helping families affected by dementia navigate financial challenges on Carefull's website. "Alzheimer's disease comes with a daily financial reality for families, and we are beyond proud to be working with the Alzheimer's Association to ensure financial safety is part of the cognitive health conversation" Share Designed to detect early behavioral signals and safeguard day-to-day finances, Carefull offers both a window into the early stages of cognitive change and a system to help preserve the financial independence and wellbeing of those affected. Carefull partners with financial institutions nationwide to bring these protections directly to the families they serve. Each year, more than 900,000 Americans develop Alzheimer's disease, with 7.2 million people aged 65 and older currently living with the condition. Behind each diagnosis is a network of loved ones offering critical support— nearly 12 million unpaid caregivers in the U.S. provide more than 19 billion hours of care annually for individuals with Alzheimer's or other dementias. 'We're committed to working with organizations that share our mission to protect and support older adults and their families. This effort is about helping families see what's happening sooner and act with confidence,' said Todd Rovak, Co-Founder of Carefull. 'Alzheimer's disease comes with a daily financial reality for families, and we are beyond proud to be working with the Alzheimer's Association to ensure financial safety is part of the cognitive health conversation.' Growing evidence shows that financial missteps—like missed bill payments, rising credit card debt, or unusual generosity—can signal early cognitive decline, including Alzheimer's. Research from institutions such as Johns Hopkins, Georgetown, and the National Institute on Aging suggests these behaviors may surface up to six years before a clinical diagnosis. Identifying these financial warning signs offers a powerful opportunity for early intervention and support. Carefull turns this insight into action, offering families and caregivers proactive tools that can detect behavioral changes in financial activity. Through real-time alerts, Carefull ScamCheck, trusted contact infrastructure, and an expert and empathetic care team, Carefull provides early signals that allow families to act before small issues become life-altering crises, and deploy a system to safeguard someone who may become vulnerable to inbound financial scams. Long before a diagnosis, subtle financial changes like missed bills, unusual spending, or increased vulnerability to scams, can be among the first signs that something is wrong. Early detection of Alzheimer's can make a significant difference in how families respond, plan, and care for a loved one. About Carefull Carefull is the first financial safety platform designed to protect aging adults and their families, from elder fraud, scams, and money mistakes. Built to support the unique needs of older adults, Carefull's proprietary AI provides 24/7 account monitoring, a suite of identity and home protections, along with expert resources to help families, advisors, and financial institutions safeguard families' financial well-being. Banks, credit unions, and wealth advisors use Carefull to deepen relationships across generations, provide proactive protection, and enhance trust with clients navigating both aging and financial caregiving for older adults. Recognized for its innovation in financial safety, Carefull partners with leading institutions to put financial care into financial services. Learn more at About the Alzheimer's Association The Alzheimer's Association is a worldwide voluntary health organization dedicated to Alzheimer's care, support and research. Our mission is to lead the way to end Alzheimer's and all other dementia — by accelerating global research, driving risk reduction and early detection, and maximizing quality care and support. Our vision is a world without Alzheimer's and all other dementia®. Visit or call 800.272.3900.
