Yesterday’s trading session ended with crude closing up $0.59/bbl to $44.59, RBOB up $0.0286/gal to $1.3329 and HO down $0.0035/gal to $1.50. Last Tuesday, WTI was $1.35 more expensive at $45.94, RBOB was $0.0692/gal more expensive at $1.4021, and HO was $0.0938/gal more expensive at $1.5938. A week of declines could end today, with the refined product futures of HO and RBOB are currently trading around four to five cents higher than yesterday’s settlement prices.
The 4 to 5 cpg increase in the market is a direct reflection of the data released by the API last night. The API Data release show that US crude inventories had a 3.1 million barrel draw, 1.5 million barrels of which was in Cushing, OK. There was a build in gasoline of 518,000 barrels and a build in distillate of 3.1 million barrels. The API stated refinery utilization increased by 1.4% to 92.6%.
The Chicago cash market for CBOB and RBOB had a significant increase from Monday into Tuesday. Chicago CBOB went from $1.3590 to $1.5108, a $0.1518 increase. Chicago RBOB went from $1.5465 to $1.7508, a $0.2043 increase. The spike in the Chicago cash market could be supported from the shutdown of a coker unit at BP’s 135,000 bpd Toledo, Ohio refinery, but is estimated to be down only 10 days.
Contango opportunities continue to exist in the market. Contango is a situation where prices today are lower than those in future months, which gives a great opportunity for customers who have access to storage to lock in a profit. For example, October 2015 HO futures closed last night at $1.50/gal and October 2016 HO futures closed last night at $1.6570/gal, resulting in a $0.1570 difference.