Atlantic Coast gasoline demand boosts US Gulf Coast prices
The US Gulf Coast finished regular gasoline differential jumped 4.75 cents/gal Wednesday to the NYMEX April RBOB futures contract minus 2 cents/gal.
The Atlantic Coast demand increase was a supportive factor for the Gulf Coast gasoline prices. Furthermore, Wednesday being the last day of Colonial Pipeline’s 15th shipping cycle.
The coronavirus outbreak could be boosting demand, sources said.
A trader said he was hearing that the focus was more on driving than flying as a result of the outbreak.
The US Energy Information Administration data showed Wednesday a 151,000 b/d increase in nationwide gasoline demand to 9.2 million b/d in the week ended February 28. This is the highest level since the week ended December 20, when consumption averaged 9.3 million b/d. Demand last week was 1.3% above the five year-average for the time of the year.
The Atlantic Coast region accounts for almost 35% of the US demand because of its highly concentrated population. The Atlantic Coast is a net gasoline importer region, which produces around one-third of the required product. The rest has to be supplied with imports and shipping from the Gulf Coast and the Midcontinent.
Gasoline blendstocks are shipped from the US Gulf Coast on the Colonial Pipeline system to produce the finished gasoline that the Atlantic Coast area requires.
Imports from Europe to the Atlantic Coast dropped to 6.1 million barrels in February from 10.5 million barrels in January, according to the US Customs database, and the imports may continue to drop amid new outages in European refineries.
According to European market sources, the values for crude in Europe have come under pressure from the run cuts and concerns that coronavirus is not just hitting demand in Asia, traders said.
Weak middle distillate margins, as a result of coronavirus and IMO 2020, have seen some European refiners cut throughput ahead of the traditional spring maintenance season, hitting values for North Sea crude.
Seasonal refinery maintenance is underway in the Mediterranean and Northwest Europe, however, while some refineries may simply reduce their run rates, others have made the decision to either bring forward their turnarounds or resell crude barrels they originally planned to run through their own systems, traders said.
The lower amount of product coming from Northwest European refinery and the spring transition already on the way could continue supporting the Gulf Coast prices the next weeks.
Wednesday was the last day for the Colonial Pipeline shipping cycle number 15. There are just five more days to ship 11.5 RVP material to the NYH region before the shift to 9 RVP specifications which has a higher price because of the better quality.