Gasoline Prices Recover Amid Speculation of Refinery Cuts

Strategic Insights -

Gasoline prices in the United States made a rebound on Friday, reversing a decline that had caused spot-market gasoline to become cheaper than manufacturing it. This significant drop in prices sparked speculation among traders that refineries might reduce their output, leading to a subsequent rise in futures prices. The recovery in gasoline prices has been linked to concerns over a potential shortage of reformulated gasoline supplies this winter, following Congressional actions that restrict foreign refineries from selling into the US market.

Key Takeaways:

  • Gasoline prices rose on Friday, with reformulated gasoline futures for December delivery increasing by 0.67 cents to 52.72 cents/gallon on the New York Mercantile Exchange.
  • The price of April reformulated gasoline futures rose 0.45 cents to 57.60 cents/gallon, opening a 12.5-cent gap over conventional November gasoline.
  • Prices for October unleaded regular gained 0.55 cents to 44.74 cents/gallon.
  • The recovery in gasoline prices has been attributed to expectations of a shortage in reformulated gasoline supplies this winter.
  • Petroleos de Venezuela S.A. (PDVSA), a major supplier, announced it will be unable to compete equally with US refiners in the US market until the third quarter of 1996, due to Congressional actions.
  • PDVSA plans to challenge the US rule as a violation of the General Agreement on Tariffs and Trade.

Statistics:

  • Reformulated gasoline futures for December delivery rose 0.67 cents to 52.72 cents/gallon.
  • April reformulated gasoline futures rose 0.45 cents to 57.60 cents/gallon.
  • Prices for October unleaded regular gained 0.55 cents to 44.74 cents/gallon.
  • The 3-2-1 crack spread rose 7 cents to $2.28/bbl.
  • October No. 2 heating oil futures gained 0.30 cents to 47.01 cents/gallon.
  • Wholesale prices of low-sulfur diesel were cut 0.53 cents to 52.76 cents/gallon.
  • No. 2 prices were reduced 0.45 cents to 51.72 cents/gallon.

Sources:

  • Bloomberg (no date)
  • Petroleos de Venezuela S.A. (no date)
  • The Oil Daily in cooperation with Computer Petroleum Corp.