Increased gasoline production in the US midcontinent has lifted inventory levels and weighed on prices, causing arbitrage economics from the US Gulf coast to close on paper.
Midcontinent refiners produced 2.6mn b/d of finished gasoline last week, up by 3.2pc from the prior week to the highest since early July, as the region's crude throughput rose to a four-week high of 3.9mn b/d, US Energy Information Administration (EIA) data show.
Midcontinent total gasoline inventories rose to 49.1mn bl, up from 47.9mn bl the week prior, while CBOB stocks were up by 2.7pc to 31mn bl last week. Market participants said gasoline production has continued to rise this week, adding to regional stocks in recent days.
Gasoline demand typically tapers following the summer travel season, which could pressure prices.
CBOB prices at the Buckeye Complex in Hammond, Indiana, fell to a 7.88¢/USG discount to the Nymex today, having widened by more than 5¢/USG this week to the lowest level since 1 June. The Wolverine Pipeline, which carries refined oil products eastward from the Buckeye Complex, similarly saw multiple CBOB deals struck between an 8¢/USG and 7.75¢/USG discount to the Nymex today.
Arbitrage economics for shipping US Gulf coast CBOB to the Buckeye Complex closed on paper yesterday for the first time in four sessions at 1.18¢/USG below Explorer Pipeline's 6.8¢/USG tariff. The arbitrage opportunity between the regions was unviable on paper 12 consecutive sessions before opening this week.
Elsewhere in the midcontinent, Magellan Pipeline CBOB at Tulsa, Oklahoma, reached a 5.25¢/USG discount to the Nymex today, a five-session low.