RBOB DOWN ON POOR ECONOMY AND SATURATED MARKET
Poor economic data streaming from US agencies in recent weeks has weighed on gasoline as investors assume increased demand destruction. The US Labor Department announced that initial claims for unemployment insurance fell by 1,000-4,000 last week. This beat expectations for a rise of 405,000, but was still at the higher threshold for unemployment at this time of year.
This was coupled with news earlier this week that the manufacturing sector in the US was not growing, and that the growth rate for gross domestic product (GDP), announced last week, was lower than expected
The higher-than-expected inventories for last week also pushed reformulated gasoline blendstock for oxygenated blending (RBOB) prices lower. Rising gasoline supplies indicates a saturated market and low demand.
RBOB PAVES PATH FOR THE STUMBLE OF USG SPOT PRICES
US Gulf (USG) spot gasoline differentials stabilised slightly after dropping significantly on Wednesday supported by the idea of demand destruction by the build in inventories.
Despite some differentials strengthening, the vast fall of RBOB futures dragged spot gasoline prices lower by 16.75-18.75 cents, making small changes in differentials moot.
NYH GASOLINE DIFFERENTIALS WERE STEADY
New York Harbor (NYH) gasoline differentials held stable with the largest change in differentials at 0.25 cents. Trading took no big steps out of the comfort zone on the plunge of RBOB prices through the day. Spot prices for NYH gasoline fell 19.25-19.75 cents/gal.
MIDWEST SPOT GASOLINE MARKET THIN WITH MIXED RESULTS
Spot gasoline differentials in the midwest market were mixed with Chicago conventional blendstock for oxygenated blending (CBOB) weakening by 1.50 cents and unleaded regular gasoline in the midwest strengthening slightly.
Traders hoped that differentials would get a boost from bargain buying because of the hard fall of RBOB. Bargain-buying did not take place though, and the market remained thin.
The spot market for naphtha on the US Gulf saw no activity as traders held back on the second day of RBOB plummeting. With naphtha trading at a discount to spot US Gulf gasoline, traders were uncertain about trades and just watched the NYMEX.
Late on Wednesday afternoon, ConocoPhillips sold heavy naphtha at 17.50 cents under waterborne gasoline for good quality 42 N+A with prompt delivery to St Charles, Louisiana. The recipient was CITGO. Adjusting for the superior quality, prompt delivery, and waterborne gasoline basis, this deal indicated a price of 19.5 cents under Colonial Pipeline gasoline.
European MTBE prices continued to drop off steeply in response to gasoline losses. Two trades were done at $1,198/tonne FOB AR. EuroBob gasoline traded at $998-1,021/tonne, putting the MTBE factor against cash barges at 1.17-1.20. US Gulf MTBE prices were assessed at a 15-20 cent/gal discount in the range of $3.1750-3.2250/gal.
