Strong Margins Support US Gasoline Retail Prices Ahead of Summer

US gasoline futures have risen more than a fifth so far this year with focus on US retail prices ahead of the US presidential election. Refining margins above seasonal norms are a sign of tightness as the US summer driving season approaches.

• Upside price pressure has been driven by scheduled and unplanned refinery outages and drone attacks on Russian facilities combined with higher shipping costs due to Red Sea and Panama Canal diversions. Stockpiles of both gasoline and distillates are well below seasonal norms.
• More than 1mb/d of new refining capacity is set to come online this year according to Bloomberg but projects are often subject to delays.
• Premium gasoline prices are at risk of reaching a multi-year high this year, said Mukesh Sahdev at Rystad Energy.
• “There’s not a lot President Biden can do in time for the election, if this happens” he said. “Strategic petroleum reserves are low, and there are few levers for the US government to pull to lower gasoline prices.”
• The availability of octane-enhancing blending components is a concern for the global gasoline market. Western sanctions on Russia pressuring output of components like alkylate and reformate is unlikely to go away this year, said Jorge Molinero at Sparta Commodities.
  • US 321 crack down 0.2$/bbl at 31.09$/bbl
  • US gasoline crack up 0.2$/bbl at 30.46$/bbl
  • US ULSD crack down 0.9$/bbl at 32.36$/bbl