Viewpoint: NYH gasoline remains well supplied in winter

New York Harbor gasoline will likely remain well supplied through the rest of winter as weak demand and steady imports help sustain stock levels before the market transitions to summer grades in March.

Gasoline imports have increased in recent weeks, with total PADD 1 gasoline imports averaging 403,000 b/d during December in comparison with 294,000 b/d in November, according to data from the US Energy Information Administration (EIA). Transatlantic tanker fixtures continued to emerge from Europe.

Domestic supplies are also set to stay at a high level. Gasoline blend stocks originating in the US Gulf coast continue to ship as far north as New York Harbor given the open arbitrage between regions since late October. Despite New York Harbor being well stocked, weakness in the Gulf coast market meant refiners continue to ship at maximum capacity on the Colonial pipeline.

Colonial pipeline's main southern gasoline line, extending from Pasadena, Texas, to Greensboro, North Carolina, is currently allocated, meaning shipping demand has exceeded capacity. Line space reached a two-year high on 26 December at 5.25¢/USG and has continued to trade in positive territory. Positive line space suggests stronger demand for shipping product from the Gulf coast to delivery points along the pipeline.

The conclusion of seasonal refinery turnarounds in PADD 1 also led to a recent increase in local refinery runs, contributing to regional supply levels. Refinery utilization averaged 87pc from late November through December, up from an average of 76pc in early November.

Strong domestic and international supplies kept regional gasoline stocks above prior-year levels during December. Total gasoline stocks were 1.9mn bl higher year on year at 60.3mn bl on average. Regular RBOB stocks averaged 18.4mn bl, in comparison with 18.2mn bl over the same period last year.

Prompt New York Harbor RBOB weakened to its lowest cash price in over two years at $1.32/USG on 27 December amid ongoing declines in Nymex futures. The cash price increased slightly to $1.37/USG by the close of 3 January. RBOB differentials were valued at a premium of 1.725¢/USG to Nymex futures yesterday.

New York Harbor RBOB is in backwardation through the end of January, meaning prompt barrels are valued at a premium over those scheduled for later delivery. Bearish sentiment has continued to support the backwardation. Material set for 10 January delivery has been about 1.25¢/USG higher than barrels arriving 31 January, while barrels available in the next two days have averaged 0.4¢/USG over barrels available three to seven days out during the past week.