RigData Insights

Winter is coming … to narrow US gasoline spreads

  • Tuesday, August 15, 2017
  • Posted By Meagan Wildfong

081517 Source: The Barrel Blog | Joshua Brown, US Gasoline | August 10, 2017


Perhaps the most confusing thing about US gasoline is all the changes various markets undergo. Requirements for the country’s most-used fuel change depending on the time of year and location, with markets in the same state often setting different standards.


While the biggest factor is Reid Vapor Pressure (RVP), a measure of volatility, producers and blenders must also keep in mind octane rating, oxygen and sulfur levels, and an assortment of other things. All of those factors influence what blendstocks are best suited for the particular time of year and location, which can drive prices for products that aren’t directly connected to the gasoline pool like natural gasoline and butane.


The best example of the calendar’s impact on gasoline is New York Harbor, the trading hub for the roughly 3.5 million-4 million b/d of gasoline demand on the US East Coast.


On August 4, the premium for physical RBOB over CBOB at New York Harbor narrowed by 1 cent/gal, a sizable move in a tightly traded market. At first glance it might seem odd that the more expensive grade would lose so much value so quickly to its normally cheaper counterpart. But the market is simply following its historical pattern.


To continue reading article, please click link to the Barrel Blog.




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