Most of the gasoline imports go to the United States.
Texas Refiners Return After February Blackouts
RBOB fracture propagation weakens as reserves build up
US gasoline inventories rose 4.04 million barrels to 234.59 million barrels last week on a spike in imports and higher refining volumes, data from the US Energy Information Administration showed on April 7.
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Gasoline imports rose 678,000 barrels per day to 1.3 million barrels per day, with the bulk of the increase – 635,000 barrels per day – heading to the US Atlantic Coast, where NYMEX RBOB futures are delivered.
NYMEX RBOB futures fell after EIA data, with the first month spread against ICE Brent oil ending at $ 18.82 / bbl on April 7, up from $ 19.70 / bbl on April 6.
However, that’s up from minus $ 1.85 a barrel at the same time last year when the spread of RBOB crack was sent into negative territory due to the global lockdown of the coronavirus.
US gasoline crack penetration and refining margins have surged this year as the US began to open up, thanks to a steady increase in coronavirus vaccinations.
Apple Mobility data shows that US driving activity rose 2.6% last week, to its highest level since the week ended September 11, 2020. Driving activity has increased by more than 156% compared to the level of the previous year.
In contrast, quarantines continue in Europe due to slower vaccination rates, which reduces demand for vehicle fuel.
OANDA’s senior market analyst Edward Moya noted that news of a “possible” link to rare blood clots due to the AstraZeneca vaccine has already led the UK to stop distributing the vaccine to those under 30.
“The introduction of the COVID vaccine in Europe has been very disappointing and today’s announcement that the UK will offer alternatives to people under the age of 30 could lead to further hesitation in the vaccine,” Moya said.
Restrictions in Europe have helped the US bolster the gas arbitrage economy.
The arbitration opened wide in February after several Texas refineries collapsed due to unusually cold temperatures. USAC relies on gasoline coming from the US Gulf Coast through the colonial pipeline, as well as imports by water, mainly from Europe.
According to the EIA, USGC refineries were operating at 83.1% of capacity in the week ending April 2. That figure was unchanged for the week, but up from 40.9% at the peak of Texas blackouts in the week ending February 26.
An increase in refining volumes helped boost USGC gasoline inventories last week by 838,000 barrels to 80.44 million barrels, roughly in line with the five-year average, according to EIA data.
But the biggest increase in inventories came at USAC, where inventories jumped 2.6 million barrels to 63.99 million barrels, which also kept inventories at the five-year average.
Good supply of distillates
Distillate stocks in the United States are well-secured compared to gasoline, which is reflected in the spread of ULSD cracks. ULSD quotes the first month compared to ICE Brent crude, which ended April 7 at $ 12.75 per barrel.
Distillate stocks in the United States rose 1.45 million barrels to 145.55 million barrels last week, bringing stocks about 5% above the five-year average and about 19% over the same period last year.
The main gains last week came from the USGC, where combined inventories of low and ultra-low sulfur diesel fuel rose 1.3 million barrels to 47.75 million barrels.
USGC’s distillate production has surged since February, when Texas refineries returned to service, boosting shipments to the region. Sluggish distillate exports are also driving up the surplus as overseas demand remains stifled by the coronavirus lockdown.
Distillate exports from the United States, with a four-week moving average of 903,000 barrels per day, rose 154,000 barrels per day last week from the previous week. But before the coronavirus in 2019, exports hovered well above 1 million barrels per day, often reaching 1.4-1.5 million barrels per day.
According to the EIA, an increase in refining volumes last week reduced US oil inventories by 3.53 million barrels to 498.31 million barrels.
In addition, US crude oil exports rose 260,000 barrels per day to 3.43 million barrels per day, while crude oil imports rose 119,000 barrels per day to 6.26 million barrels per day, helping to reduce inventories.
Crude depletion had little impact on NYMEX crude oil futures on April 7, as inventories remained slightly above the five-year average.