ST. PETERSBURG, Fla. -- For fuel retailers hoping to make money, the second quarter of 2016 is off to a weak start.
Retail gasoline margins in April were about 7% below the three-year average for the month, or off about 15 cents per gallon (CPG), according to the latest Convenience Store Grab-N-Go research note by Raymond James & Associates, St. Petersburg, Fla. On a year-over-year basis, margins were up 9%, although April 2015 margins were atypically low.
National retail diesel margins dropped 32% year over year to hit a five-year low for the month as rising wholesale prices cut margins almost in half in the middle of April.
On a regional basis, the Southeast and Texas enjoyed the largest year-over-year margin growth, up 31% and 18%, respectively. But both regions fell short of the three-year average, with Southeast retail margins down 22% and Texas off 10%.
April is traditionally one of the three weakest months of the year for retail fuel margins. May and June margins rise 20% to 40% sequentially on growing demand and the transition to summer fuel blends. In fact, national retail fuel margins during the first two weeks of May rose about 20% sequentially, and were about 25% above levels from a year ago.
For the quarter ending in June, Raymond James analysts are projecting a 10- to 15-CPG increase in gasoline margins year over year, and a 10- to 15-CPG yearly decline in diesel margins.
Raymond James’ coverage area includes Casey’s General Stores, CST Brands, Murphy USA, CrossAmerica Partners, Sunoco LP and TravelCenters of America.