NEW YORK – A slew of refinery problems that surfaced last week likely mitigated the size of an expected build in U.S. gasoline stocks, which should be price supportive for New York Mercantile Exchange (NYMEX) RBOB* futures, despite record-high domestic production, according to an S&P Global Platts preview of this week’s pending U.S. Energy Information Administration (EIA) oil stocks data.

Survey of Analysts Results:

(The below may be attributed to the S&P Global Platts survey of analysts)

  • Gasoline stocks expected to show a build of 1.3 million barrels
  • Distillate stocks expected to fall 780,000 barrels
  • Crude stocks expected to drop 3.5 million barrels
  • Refinery utilization expected to decline 0.4 percentage points

S&P Global Platts Analysis:

(The below may be quoted in part or full, with attribution to S&P Global Platts Oil Futures Editor Geoffrey Craig)

The NYMEX RBOB crack against West Texas Intermediate (WTI) rebounded above $15 per barrel (/b) last week after having fallen to its lowest level since February. The RBOB crack had dropped to $12.15/b on December 15, down from more than $19/b in early November, under pressure from rising U.S. gasoline stocks.

U.S. gasoline stocks have increased six straight weeks by 18.2 million barrels to 227.7 million barrels. Analysts surveyed Tuesday by S&P Global Platts are looking for stocks to have risen 1.3 million barrels last week, versus an average increase of 1.09 million barrels from 2012-16.

Even though gasoline stocks keep rising, the fact that the size of builds has moderated to levels consistent with seasonal norms has helped lift the RBOB crack off its multi-month lows.

In addition, implied** gasoline demand jumped 335,000 b/d to 9.426 million b/d the week ended December 15. The same week also saw Atlantic Coast gasoline inventories drop 1.38 million barrels to 57.82 million barrels.

In the physical market, New York Harbor spot gasoline strengthened last week amid refinery problems in the region and buying demand ahead of the holiday weekend.

Cash RBOB was assessed by Platts at NYMEX January RBOB plus 25 points per gallon Friday, returning to a premium for the first time since November 29.

Philadelphia Energy Solutions restarted a unit last week at its 335,000-barrels-per-day (b/d) refinery, which was shut along with three others during a power outage December 15. Those three units at the refinery remain down. Another unit was shut Wednesday for maintenance.

Another refinery problem that boosted New York Harbor gasoline prices last week was the brief outage of the fluid catalytic cracker (FCC) at the 190,000-b/d plant owned by Monroe Energy, a unit of Delta Air Lines, in Trainer, Pennsylvania.

In the Midwest, operational issues impacted Exxon Mobil’s 238,600-b/d refinery in Joliet, Illinois, along with Marathon’s 93,000 b/d Canton, Ohio, refinery and BP’s 153,000-b/d joint venture refinery in Toledo, Ohio.

The differential of Chicago CBOB to prompt NYMEX RBOB rose to 13.5 cents/gal Thursday, the highest since early November.

Gulf Coast gasoline differentials got a lift early last week from problems facing Motiva’s 603,000-b/d Port Arthur, Texas, refinery. Valero’s 195,000 b/d refinery in Sunray, Texas, also had issues.

Any outages would help drain Gulf Coast gasoline stocks, which stood at 83.992 million barrels, the highest since January and a 6.8% surplus to the five-year average.

In Northwest Europe, reduced run rates at the Grangemouth refinery in Scotland because of the Forties pipeline closure have started to have an impact on the region’s gasoline supplies.

After five straight draws, gasoline stocks in the Amsterdam-Rotterdam-Antwerp hub fell to 833,000 metric tons (mt) the week ended December 20, according to data from PJK International.

The Grangemouth refinery is largely fed by North Sea crude via the 600,000 b/d Forties pipeline. 


The differential for the Gulf Coast ULSD market to NYMEX ULSD fell to its biggest discount since March 2016, driven in part by a desire to minimize ad valorem taxes that are based on holdings at the end of December. That has spurred selling interest, though USGC stocks of low and ultra-low sulfur diesel look pretty tight. Combined USGC stocks were 34.5 million barrels the week ended December 15, 6.3% below the year-ago level and 1.4% less than the five-year average for the same time of year.

Even though diesel stocks on the Atlantic Coast sit 22.6% above the five-year average at 45.457 million barrels, the NYMEX ULSD crack remains solid. The ULSD crack was 96 cents higher at $25.31/b on Tuesday afternoon, moving above the approximately $22-$25/b range in place since September.

Forecasts calling for relatively cold temperatures across the eastern and central U.S. this week have boosted heating fuel demand.

Total distillate inventories are expected to have fallen 780,000 barrels last week. That compares with an average build of 470,000 barrels for the same week from 2012-16.


Crude oil stocks are expected to have fallen by 3.5 million barrels last week. The five-year average shows a draw of 737,000 barrels for the same reporting period.

Inventories have already dropped for five straight weeks by 22.5 million barrels to 436.49 million barrels, the fewest since October 2015.

The surplus to the five-year average equals 10.2%, down from more than 25% in mid-September.

This tightening has raised the profile of supply disruptions, which now seem more likely to become market-moving events.

Prompt-month New York Mercantile Exchange (NYMEX) crude oil futures had been trading in a band of $56-$59/b, but moved above that range Tuesday on news of a pipeline explosion in Libya that may result in the loss of supply. That comes on top of the Forties pipeline closure which remains shut for repairs after a crack was discovered in an onshore section in eastern Scotland earlier this month. U.S. crude oil producers will probably seize the opportunity to replace any lost barrels, particularly with the ICE Brent/WTI spread hovering Tuesday afternoon wider than $7/b.

High exports will help lower U.S. crude oil inventories further, as will strong refinery activity. Crude oil refinery runs averaged 17 million b/d over the last four weeks, more than 500,000 b/d above the same period a year ago.

Refinery utilization is expected to have fallen by 0.4 percentage points last week to 93.7% of capacity. A year ago the utilization rate equaled 91% of capacity.

For more information on crude oil, visit the S&P Global Platts website.

* Reformulated blend stock for oxygenate blending (RBOB) futures contract, the biggest premium to the front-month contract since late August.

** Implied demand is the amount of product that moves through the U.S. distribution system, not actual end consumption.

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