Physical RBOB gasoline prices in most US markets have climbed rapidly over CBOB prices in recent weeks amid tightness for product and supply disruption in the Midwest, according to S&P Global Platts data.
Gulf Coast RBOB gasoline ("F-grade") has hovered near its highest premium to CBOB since March 2014. S&P Global Platts assessed RBOB with 7.8 RVP at a 19.65-cent premium to CBOB with 9 RVP on Wednesday.
Platts assessed RBOB at NYMEX June RBOB futures plus 4.25 cents/gal on Wednesday after a bid in the Platts Market on Close assessment process rose to that level and traded.
"This has been shaping up for two weeks now. RBOB has been getting tighter and tighter in the supply chain and stronger and stronger ahead of Memorial Day weekend and high driving demand season," said one market participant.
RBOB inventories have tumbled over the past two weeks, according to US Energy Information Administration data released Wednesday.
Total US RBOB stocks fell 234,000 barrels in the week ended May 18 and were down 572,000 barrels from two weeks ago.
Total CBOB storage levels, on the other hand, rose 3.656 million barrels in the week ended May 18 and were up 2.153 million barrels from two weeks ago.
Part of the strength may have come from reported outages at undisclosed units at ExxonMobil's 238,600 b/d Joliet, Illinois, refinery.
ExxonMobil did not return a request for comment, but in the past has declined to discuss ongoing plant operations, citing company policy.
Racks across the country have felt that tightness in RBOB stocks, finding price support from broad strength in gasoline prices.
Unbranded 87-unleaded rack gasoline in Pasadena, Texas, rose to $2.2965/gal Thursday from $2.2685/gal Wednesday, according to the daily Telvent/DTN rack price survey. The same product at Baltimore rose 12 points to $2.2926/gal Thursday morning, while Chicago saw the product rise to $2.7621/gal from $2.7126/gal Wednesday.
RBOB at 7.8 RVP on the northern section of Colonial Pipeline rose on strength at the pipeline origin in Texas. The blendstock on Line 3 into Linden, New Jersey, and Line 4 into Maryland was heard traded at NYMEX June RBOB plus 6.50 cents/gal early Thursday, up 1 cent from the Wednesday assessment.
"That pop is reflecting the Gulf Coast pop of [RBOB]," a US light ends source said. "I wish I was blending again."
Blendstocks for the East Coast on Colonial found support in strong rack prices, the light ends source said. RBOB sold Wednesday for Colonial Pipeline's 29th cycle should reach Baltimore in late June, the source said.
The Chicago market, fed through the Explorer pipeline from Houston, also rose on tight supply.
Chicago RBOB was heard bid at NYMEX June RBOB futures plus 18 cents/gal Thursday, suggesting its highest level since early November 2017.
Supply has been tight in that area, with the latest Energy Information Administration data showing regional stock levels drew to their lowest levels in almost six months the week ended May 18.
The RBOB market is prone to rise on shorts with little of the product shipped on the Colonial system in relation to CBOB or finished gasoline, a third US light ends source said.
"There is not a lot of volume being shipped, and there is no incentive to sell at a loss," the third source said.
