Domestic opportunities for shipping US Gulf coast gasoline and diesel have remained robust in recent days following federal officials urging US refiners to rebuild fuel stockpiles and curtail hefty export volumes.
Gasoline price spreads between the Gulf coast and US northeast have held at record highs this week, while inter-regional spreads to Chicago widen amid thin US midcontinent supply following an electrical fire that led to the shutdown of multiple units at BP's 410,000 b/d refinery in Whiting, Indiana, last week.
Yet even as domestic options remain attractive, exports of gasoline and diesel from the Gulf coast have continued to surge higher. Cargo departures of Gulf coast gasoline and blendstocks have averaged 768,950 b/d through the first 30 days of August, rising by 22pc from a year earlier and surpassing the five-year average by 23pc, according to oil analytics firm Vortexa. In the five days between 26-30 August, gasoline shipments have averaged 783,510 b/d, up by 75pc from the same stretch a year prior.
Waterborne movements of Gulf coast diesel have increased by 44pc to 1.26mn b/d in August compared with a year earlier and are up by 55pc from the five-year average for the month.
The upswing in exports has added to tight fuel supply throughout much of the US. Atlantic coast diesel stocks were down by 35pc to just under 27.5mn bl the week ended 19 August from a year earlier, US Energy Information Administration (EIA) data show. Diesel inventories at the midcontinent lagged year-earlier levels by 18pc at 26.3mn bl that week.
Meanwhile, total US gasoline supply declined each of the first three weeks this month. Atlantic coast gasoline stocks fell by 4.9pc to 53.6mn bl the week ended 19 August from a year earlier, while midcontinent gasoline inventories declined by 4.5pc to 46.8mn bl from the same week in 2021.
With supply declining and the Atlantic hurricane season looming, the administration of President Joe Biden sent letters to seven US refiners two weeks ago, asking them to increase gasoline and diesel supply by reducing exports. Retail diesel prices at the US climbed above $5/USG last week for the first time since 1 April, while gasoline prices declined for an 11th consecutive week.
Domestic options attractive
Colonial Pipeline RBOB prices at the Gulf coast fetched a 30.02¢/USG discount to Buckeye Pipeline prices at the New York Harbor last week. This was 3.48¢/USG narrower than the prior week, but it exceeded year-earlier levels by 17.11¢/USG and was the widest spread for that week since at least 2006.
Gulf coast prices similarly averaged a 30.69¢/USG discount to offline Colonial prices at Linden, New Jersey, holding well above Colonial's 6.58¢/USG shipping tariff to the widest for that week since at least 2016. Meanwhile, the arbitrage opportunity for shipping Gulf coast CBOB to Chicago widened to 18.125¢/USG on Monday after notching a narrow 1.62¢/USG discount to Chicago just three sessions prior on 24 August.
Inter-regional diesel spreads have not been as wide compared with gasoline, but price spreads have remained open on paper. Offline Colonial diesel prices in the northeast averaged a 7.904¢/USG premium to the Gulf coast last week, marking a three-week high. The spread widened to 9.16¢/USG on Monday, up by 4.16¢/USG from a year earlier.
Shipping Gulf coast diesel to Chicago has been open 13 consecutive sessions, with Chicago prices fetching an 18.58¢/USG premium on Monday. Shipping diesel to Tulsa, Oklahoma, has been viable on paper all but one session since 29 July.
An uptick in midcontinent agricultural activity could widen those inter-regional spreads further heading into the autumn harvest season.
