Late last week we saw a huge rally in the market, pushing crude back over $40/bbl to $45 which was an increase of roughly $7/bbl in just two trading sessions. This morning we continue to trade over last Monday’s six-and-a-half year low of $38.25/bbl; however at $44.01/bbl, down $1.21, oil prices are continuing to sense the effects of global oversupply and the volatile state of the economy in China. Diesel prices, which are currently in contango and get stronger going forward, are down three-and-a-half cents this morning to $1.5442. RBOB gasoline is down 3cts/gal as well, to $1.4918 in the front month, but $1.3484 in Oct RBOB as the spec change looms. Gasoline prices fell on average 20cts/gal in the month of August, and this time last year were roughly $1/gallon higher. Besides the global oversupply of crude and the weakening economy in China, this morning’s early drop in market prices, after last week’s historical rally, may be attributed to super-storm Erika’s lackluster performance. Last week’s rumors and predictions for the impact of this storm on the Gulf Coast market did not pan out exactly as planned. It also appears that Fred is headed north behind it.
As we move from August into September it is important to pay attention to the RVP changeover which will occur on September 15th at midnight. Starting at 12:01 AM on September 16th, customers will be able to order/receive 9.0 # gasoline. Currently, the futures spread from 7.8# RBOB to 9.0# is roughly 13cts/gallon lower. In our area, this will affect the following regions:
*A future reminder of this changeover will come the week of the change.