Spot price assessments for US gasoline plunged to the lowest levels of the year across the country Wednesday, pressured by high inventories and weak demand tied to seasonal changes and more efficient vehicles.
Gasoline prices in the US Gulf Coast, Chicago and Los Angeles fell to their lowest levels since December, while New York Harbor gasoline assessments fell to the lowest level since December 2011. Group 3 gasoline assessments fell to the lowest level since April 2010.
"There have been mileage improvements made in the national fleet of vehicles, and gasoline demand in the US has flattened due to a weaker economy," one East Coast energy analyst said. "Plus demand always falls this time of year."
Platts assessed the NYMEX November RBOB futures contract at $2.5505/gal as of 3:15 pm EDT Wednesday, down from $2.6198/gal Tuesday. That's the lowest level since a December 19, 2011, assessment at $2.492/gal.
Group 3 gasoline was assessed at $2.3180/gal Wednesday, or the NYMEX November RBOB futures contract minus 23.25 cents/gal. That is the lowest assessment since April 30, 2010, when it was assessed at $231.19/gal.
In Chicago, gasoline was assessed at $2.3280/gal Wednesday, or the NYMEX November RBOB contract minus 22.25 cents/gal. It was previously assessed at $2.3041/gal on December 19, 2012.
Midwest refinery utilization rates were the highest in the US, at 91.2% for the week ended October 18, the US Energy Information Administration said Wednesday. At the same time, gasoline inventories also showed a 200,000-barrel build for the week ended October 18, to 49.7 million barrels.
Both Group 3 and Chicago are switching to a high-RVP winter fuel blend by the end of the October, adding to pressure to sell.
In the Gulf Coat, spot 13.5 RVP conventional gasoline fell Wednesday to its lowest assessed value so far this year, put at $2.348/gal, as the falling NYMEX RBOB basis and a pipeline scheduling deadline combined to put downward pressure on markets.
Sources attributed some of volatility to the fact that it was a scheduling deadline for Colonial Pipeline's 59th shipping cycle, the penultimate cycle for October barrels.
Wednesday's assessment was the lowest since December 12, when conventional was assessed at $2.3366/gal.
The fall in prices in the Gulf Coast came despite fresh Energy Information Administration data that showed a third-successive week of stock declines, with inventory for the week ended Friday declining 2.3 million barrels to 74.2 million barrels.
The draws were likely a result of export demand, given that US implied demand continued to worsen, estimated at 8.8 million b/d, down 280,000 b/d from last week.
In the New York Harbor market, price of benchmark RBOB gasoline blendstock fell to a low not seen since just before Christmas 2011.
Platts assessed barge-delivered RBOB at $2.5595/gal, down 6.35 cents/gal from Tuesday on the weaker basis contract.
Wednesday's price was the lowest since the $2.4895/gal assessed spot price on December 19, 2011.
The price of benchmark RBOB has dropped in four of the last five trading days.
The price has been falling even with regional refineries running at a 2013-low utilization rate of 66.6% as reported Wednesday by the US Energy Information Administration. Key regional refineries including the 238,000 b/d Phillips 66 facility in Linden, New Jersey, have recently begun maintenance projects.
"Lower RINs have lessened the need for aggressive US exports," one East Coast and Midwest trader said. "That and seasonal history all lead to more domestic supply around the corner, particularly with refiners coming out of turnaround soon."
The spot price of California-grade blendstock fell to a 2013 low Wednesday even with gasoline production in decline and a small drop in regional stocks.
Platts assessed Los Angeles CARBOB at a spot price of $2.6805/gal, down 9.93 cents/gal from Tuesday on a weaker basis futures contract and weaker differential.
The CARBOB price dipped to its lowest level since being assessed at $2.6685 on December 20.
The assessed spot price for Seattle conventional gasoline, the least-expensive conventional gasoline assessed by Platts on the West Coast, dipped below $2.50/gal for the first time in nine months. Seattle conventional was assessed at a spot price of $2.4390/gal.
The price drop came even with an inventory drop of 48,000 barrels of gasoline to 27.635 million barrels on the West Coast last week, according to EIA data released earlier Wednesday. The spot price fell despite a decrease in production of 11,000 b/d to 1.592 million b/d.
