US Midwest gasoline spikes on delayed shipments

14 May 2013 23:07  [Source: ICIS news]

HOUSTON (ICIS)--Gasoline spot prices in the Midwest spiked after two refiners were short product and the Explorer Pipeline caused shipment delays, sources said on Tuesday.

Scheduling delays in the Explorer Pipeline, which originates barrels in the US Gulf Coast and brings them to Tulsa, Oklahoma, and then on to Chicago, Illinois, caused many to buy prompt regular unleaded gasoline in the Group 3 market to short-cover the prior commitments. 

The Group 3 market is based in Tulsa and serves the Mid-Continent region.

On Monday, ICIS assessed Group 3 spot regular unleaded gasoline prices at $3.1150-3.1175/gal, as the premium to gasoline futures on the NYMEX strengthened by 6.25 cents/gal to trade at 29.50 cents/gal over futures.

However, in the Midwest, there are few refineries, which can cause volatile trading.

By Tuesday, when the scheduling conflict increased spot buying, the Group 3 unleaded gasoline differential was assessed at 50.00 cents/gal over NYMEX reformulated blendstock for oxygen blending (RBOB) futures, a gain of 20.50 cents/gal. This put spot prices at $3.3375-3.3400/gal.

Sources expect a repeat of Tuesday’s price movement on Wednesday as shipments are not expected to arrive on the Explorer until Wednesday evening.

The Group 3 premium to futures is expected to drop once the shipment arrives, causing an influx of supplies in the region.

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By: Anna Matherne

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