NYMEX October RBOB futures settled 19.77 cents higher at $3.3420/gal Friday, after surging nearly 30 cents/gal by the close on the contract's day of expiration as traders seeking barrels had to pay up to fulfill physical deliveries, sources said.
October RBOB rose to $3.4258/gal, up 28.15 cents -- the front-month contract's highest level since April 3. The sharp jump was mostly concentrated in the October contract as November RBOB settled just 2.29 cents higher at $2.9201/gal.
"There was clearly a squeeze in the [New York] Harbor ... some people got caught short and couldn't get out and were forced to pay up [to buy barrels for deliveries]," said Gene McGillian, analyst at Tradition Energy.
There was some chatter late in the day about delays in gasoline deliveries into the harbor, but this was unconfirmed, McGillian said.
Carl Larry, president of Oil Outlooks, said it was likely a physical gasoline trader who went into the futures market on Friday to buy gasoline to fulfill a cargo delivery and was forced to pay at much higher levels.
"[The trader] likely overexposed themselves and had expected the market to go lower so they could get enough gasoline to deliver on the last day of the month and still make a profit," Larry said.
But RBOB prices continued to surge, having gained more than 40 cents/gal since Monday, and any buyers seeking barrels at the end of the session were forced to pay a premium, Larry said.
"The longs had them and with only around 5,000 lots traded on a day of expiration, it's a very risky day and people got caught short," McGillian said.
Low gasoline stocks along the Atlantic Coast -- home of the New York delivery point for RBOB futures -- lent underlying support to the front-month contract and kept it powering higher despite the timid tone of the rest of the complex, said Mike Guido, managing director of energy markets at Macquarie.
"RBOB continues to draw support from refinery turnarounds that limit output, this against a background of low inventories," said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas. "At the same time, US consumer spending on gasoline appears to be holding up despite relatively elevated retail prices. The combination of these factors is supportive of prompt gasoline prices, alongside a slight pick-up today in the price of WTI."
The tightness in supplies in the prompt gasoline market was seen in the steepening backwardation in the front of the NYMEX RBOB curve.
The backwardation for the October/November spread widened to more than 50 cents/gal during the session -- the highest backwardation ever for the spread between the front-month/second-month RBOB contracts.
It settled at 42.19 cents/gal.
For crude, futures edged slightly higher by the close after trading near flat for most of the day.
NYMEX November crude settled 34 cents higher at $92.19/b, while ICE November Brent settled 11 cents higher at $112.12/b.
NYMEX October heating oil settled up 1.21 cents at $3.1694/gal on the contract's day of expiration.
The eurozone bailout continued to play out, causing crude futures to swing between positive and negative territory "as Spain swings between disintegrating and getting their fiscal act together," said John Kilduff of Again Capital.
In the US, personal income in August was up slightly at 0.1%, in line with expectations, while personal spending was up 0.5% from a month earlier, according to the US Department of Commerce.
Meanwhile, US consumer confidence rose to a four-month high in September, according to the Thomson Reuters/University of Michigan sentiment index, which rose to 78.3 from 74.3 in August.
