Gasoline cracks have plunged in the wake of recent data from the US Energy Information Administration showing unseasonably high gasoline inventories across the country, particularly in the East Coast.
The NYMEX August RBOB crack spread basis ICE Brent settled at $11.76/b Thursday, 73 cents lower than Wednesday and down $2.75/b from the June 20 settle of $14.51/b.
Wednesday's inventory data from the US Energy Information Administration -- which saw builds across products as well as in crude stocks at the Cushing, Oklahoma, storage hub -- proved particularly bearish for gasoline market.
Inventories built by 3.653 million barrels nationally over the week ended June 21, 1.562 million barrels of which was concentrated along the Atlantic Coast, home of the New York Harbor-delivered RBOB contract.
"US gasoline stocks are some 10% above a year ago and above the five-year range," analysts from BNP Paribas said in a note. "The overhang is even more noticed when expressed in terms of days forward demand cover."
Persistently high gasoline stock levels, strong imports and a slow start to the summer driving season in the US have contributed to the bearish tone across the RBOB complex, contrasting sharply with the still-strong distillate complex.
While RBOB cracks have slid in the last week, distillate cracks have resisted downward pressure. The NYMEX August ULSD crack spread basis ICE Brent settled at $18.48/b on Thursday, down a marginal 4 cents from a week earlier.
"Distillate is holding, while gasoline is under strong pressure," Petromatrix energy analyst Olivier Jakob said, adding that demand for distillates has been good in Europe, a key export-destination for US product.
US distillate stocks also rose over the week that ended June 21, but remain more than 10% below the rolling five-year average.
"Our [distillate] inventories in the US are low, and the economy is improving," Tradition Energy analyst Addison Armstrong said. "Rail and trucking, while not booming, are certainly showing sequential improvements. That and better industrial demand and things start to look a little bit tight in the US."
Refinery utilization in the US has also shifted higher after a late-spring maintenance season, climbing above the 90% utilization mark last week for the first time since late-December, which has added to already robust gasoline stock levels.
"Gasoline demand is coming off structurally in Europe and the US," Jakob added. "The refineries on the US East Coast have come back and [the region is] really well-supplied on gasoline. Meanwhile the refineries in the Midwest are also coming back."
