The NYMEX May RBOB crack to ICE May Brent tightened Thursday, despite US data released by the US Energy Information Administration Wednesday showing a crude stocks build and gasoline stocks draw, which traditionally widens the crack.
The RBOB crack closed at $16.87/barrel Thursday, down from a weekly high of $17.47/b on Tuesday, but still well above $13.86/b set on March 5. It has widened considerably, year-on-year from the $11.32/b seen last April.
"It's a bit perplexing, having the crack come in after the large build in crude, and the draw in gasoline inventories. It was an unexpected collapse, indicative that the petroleum market in general is driven by broader macro issues, as opposed to US inventory data," said Kyle Cooper, owner of IAF Advisors in Houston. "Recently," Cooper continued, "US inventory data has not resulted in price movements that we expect."
The EIA reported Wednesday a 1.457 million-barrel stock draw for gasoline, with builds in stocks on the Atlantic Coast and in the Midwest tempering a larger 1.6 million-barrel stock draw on the Gulf Coast. RBOB prices as well as cracks have been rising over the last week on concerns of lower imports into the US Atlantic Coast, as well as tighter fundamentals and higher prices in Europe.
With European refinery runs down considerably, the supply situation is tight, combined with heavy demand coming from South America and Asia, according to Cooper.
But Rotterdam EBOB gasoline barges dropped $12/mt to trade at $1,173/mt Thursday, and FOB Rotterdam premium unleaded gasoline barges fell $4.50/mt to be assessed at $1,190.50/mt. This was the lowest price in both markets since March 23. However, the backwardation in the Northwest European markets remained wide at $36.75/mt, with traders saying market sentiment remained bullish going into the summer driving season.
The weekly EIA data was not entirely bullish for RBOB. US imports of total motor gasoline rose 321,000 b/d to 885,000 b/d, led by a 262,000 b/d increase in imports on the Atlantic Coast. The majority of total US gasoline imports were blending components, which rose to 703,000 b/d from 508,000 b/d the week prior, of which 619,000 b/d was seen on the Atlantic Coast.
However, the weekly uptick in gasoline imports to the Atlantic Coast could be anomalous, as clean tanker traffic on the benchmark United Kingdom Continent-US Atlantic Coast (UKC-USAC) route saw little traffic this week.
US gasoline implied demand on a four-week moving average was 8.554 million b/d the week ending March 30, the EIA data showed, higher for the second week in a row. The four-week average number puts demand at just 2.27% below year-ago levels, compared to 6.08% below two weeks ago. That calculation, however, factors in higher gasoline exports in 2011 than the EIA was originally reporting, which essentially lowers the 2011 implied demand figures.
Retail demand was also up the survey week ending March 30, according to MasterCard Advisors data released Tuesday. US motorists bought 62.066 million barrels of gasoline, down 3.5% from the year-ago week. But, compared to the prior week ending March 23, US retail gasoline demand rose by 2.6% to that 8.867 million b/d rate. The four-week moving average, though, showed an ongoing downtrend as it fell 5.9% to 60.857 million barrels.
Meanwhile, the NYMEX May heating oil crack spread to ICE May Brent closed Thursday at $9.90/b. The heat crack had been rangebound at $9-11/b over the past 2 weeks, but has trended down since the beginning of April.
Although US gasoline demand has been rising lately, the same cannot be said of the oil complex as a whole. Total US petroleum demand is averaging 18.19 million b/d in 2012, a level not seen since 1995.
"Total US petroleum demand is abysmal right now, despite the economy. The US economy, in terms of energy consumption, is in depression," said Cooper.
