US gasoline strengthens ahead of Memorial Day weekend

US gasoline flat prices strengthened May 27 on rising RBOB futures ahead of the long Memorial Day holiday weekend as outright prices across the Midwest surged to new records on increased demand.

Wolverine Pipeline CBOB was heard trading 9.25 cents higher at NYMEX July RBOB minus 3 cents/gal, and Buckeye Complex and Generic Pipeline remained flat to Wolverine Pipeline.

A trade for the regrade of RBOB over CBOB was heard at plus 45 cents/gal. Generic Pipeline and Buckeye Complex RBOB closed at July futures plus 42 cents/gal, up 23.25 cents/gal day on day.

On an outright basis, CBOBs spiked 21.2 cents to $3.8819/gal, and RBOBs jumped 35.2 cents to $4.3319/gal.

Tulsa suboctane traded as high as NYMEX June RBOB plus 28 cents/gal, with a source saying the strength was from suboctane tracking upward movement in Chicago, as well as heightened demand. The differential settled 25 points below the previous close at June futures minus 30 cents/gal, ending the day trading lower on the back of rising RBOB futures.

The Tulsa suboctane flat price rose 13.59 cents to $3.7158/gal.

On the Gulf Coast, the spread between the finished regular and the benchmark CBOB, which is more influenced by domestic demand, climbed 5.5 cents to a record 32.5 cents/gal.

The finished regular outright price jumped 16.45 cents to $3.9794/gal, while the differential rose 4.5 cents to futures plus 6.75 cents/gal. Before May 16, when unleaded finished closed at $4.0029/gal, the outright price was last above $4.00/gal September 2008.

The backwardation for next month on the unleaded finished market remained near 10 cents during the current week.

In contrast, backwardation on the CBOB market softened to 2.85 cents from 4.25 cents as the prompt cycle was assessed 1 cent lower at futures minus 25.75 cents/gal.

Traders related to exports said earlier this week that gasoline demand for Mexico, the Caribbean, and Canada, along with the low availability of high-octane components, has been adding support to the finished regular price on the Gulf Coast.

The spread between the waterborne and pipeline unleaded finished grade was unchanged at 3.15 cents/gal, a 10-month high, for the third consecutive day.

On the Atlantic Coast, RBOB outright prices topped $4/gal for the first time in 10 days.

New York Harbor barge RBOB rose 14.14 cents to $4.0458/gal, even as its differential to the NYMEX June RBOB contract rose only 30 points to plus 3 cents/gal. Barge RBOB reached a record-high $4.1519/gal May 16.

Barge CBOB rose 14.24 cents to $3.9978/gal, an 11-day high, and its differential rose 40 points to June futures minus 1.80 cents/gal. Buckeye Pipeline CBOB rose 13.64 cents to $3.9918/gal, showing backwardated structure as the assessment reflects barrels five to nine days forward compared with three to seven days forward for barges.

The spread between Colonial Pipeline and Buckeye Pipeline CBOB widened to 22.1 cents/gal.

Colonial Pipeline A2 CBOB at 10 RVP fell 3.50 cents to June futures minus 24.50 cents/gal. The spread between Colonial A2 CBOB and Buckeye 328 CBOB has widened out to record levels this year, reaching double digits in mid-May. In 2021, the spread averaged less than 10 points/gal.

On the West Coast, the San Francisco CARBOB differential was unchanged day on day at NYMEX July RBOB plus 60 cents on an uncompetitive bid. The flat price, however, rose 11.95 cents to $4.5119/gal, the highest assessed value since the assessment was launched Dec. 2, 2002.

June Los Angeles CARBOB jumped 10 cents to July futures plus 40 cents/gal based on a trade heard at that level. On an outright basis, Los Angeles CARBOB was up 13.45 cents to $4.3119/gal. The flat price was last stronger Oct. 4, 2012, at $4.3851/gal, and this was also the highest value in the history of the assessment.