Gulf Coast premium gasoline soars amid scarce reformate

Gulf Coast premium CBOB gasoline soared Dec. 30 amid stronger underlying futures contract, buying interest, and a thin octane market.

Premium CBOB rose 16.16 cents to $2.6603/gal after Platts assessed its differential 6 cents higher than the last close, at NYMEX February RBOB futures plus 18.25 cents/gal.

The underlying futures contract settled 10.16 cents above the last close, at $2.4783 cents/gal amid tight inventories and multiple refineries trying to reestablish operations after the severe weather last weekend.

Unleaded regular kept a 13.55 cent-premium above CBOB despite a stronger octane value.

CBOB rose on an outright basis 14.21 cents to $2.4108/gal after Platts assessed the differential 4.05 cents higher at futures minus 6.75 cents/gal.
Crazy octane

The high-low octane CBOB’s spread reached a near one-month high of 25 cents, as it was last higher Nov. 21 at plus 34 cents/gal. The spread is considered the most representative of the octane value on the Gulf Coast as it is the most liquid pair.

On a monthly basis, the CBOBs octane spread averaged plus 18.94 cents/gal, the highest December average since 2015 when it was at plus 21.59 cents/gal.

Sources related the octane strength with the low availability of reformate on the Gulf Coast after the freeze.

“Octane is crazy!” a trader said.

US Customs data shows the last reformate import arriving on the Gulf Coast was Nov. 8, when 313,142 reformate barrels arrived from Turkey to Houston.

On Dec. 26, 23,727 light reforming naphtha barrels arrived from Bahía Blanca, Argentina to Houston, likely to feed secondary units amid lower crude oil processing.

Low reformate availability

Reformate availability was thin, sources said, and Platts assessed its differential against futures at futures plus 52.5 cents/gal, 12.25 cents higher. Reformate is one of the main octane boosters.

Reformate strength against the front NYMEX RBOB futures contract was last higher Nov. 28, when the spread was at plus 62.36 cents/gal.

Sources seem to be more interested in aromatics than alkylate, and alkylate differential was unchanged at futures plus 8.25 cents/gal for the fifth consecutive day.
Backwardation widens

The spread between the prompt and the sixth shipping cycle widened from minus 3.5 cents to minus 5.45 cents of backwardation for the CBOB market structure. The unleaded regular market showed a wider backwardation as the same spread was assessed at minus 6.9 cents of backwardation, while the day before was at minus 4.3 cents/gal.

In the case of the unleaded regular market, backwardation between the first and sixth cycle in December was only wider in 2021, when the spread held at minus 7.5 cents the first week of December.

It was also during the first week of December 2021 when the CBOB market structure showed a wider backwardation than this year as the spread between the first and sixth cycle was at minus 6.75 cents Dec. 6-7, 2021.
Source: Platts