NYMEX RBOB slides further on US gasoline build, weaker RINs

NYMEX RBOB futures settled lower for a fourth straight session amid pressure from rising US gasoline stocks and weaker Renewable Identification Number prices.

NYMEX July RBOB settled June 16 1.43 cents lower at $2.1562/gal while July ULSD fell 89 points to $2.1034/b.

RBOB futures came under pressure after the US Energy Information Administration reported June 16 that US gasoline stocks climbed 1.95 million barrels to 242.98 million barrels in the week ended June 11, pushing inventories above the five-year average for the first time since mid-February.

The build comes as gasoline production pushed to more-than-one-year highs. Weekly adjusted refiner and blender net production of finished gasoline, averaged 9.93 million b/d in the week ended June 11, up 5% from the week prior and the strongest since the week ended March 13, 2020.

This higher production contributed to higher stockpiles even as total product supplied for all refined products, EIA’s proxy for demand, surged to 20.57 million b/d, up 16% from the week prior and the strongest since early February. The increase was led by sharply higher demand for both gasoline and distillates, which climbed 10.3% and 27%, respectively, to 9.36 million b/d and 4.34 million b/d, respectively.

Adding further pressure to product futures was a continued slide in RINs prices.

S&P Global Platts assessed current year D6 RINs at $1.30/RIN June 16, a 14.75 cents, or 10%, decline from June 15 and the lowest level since March 30.

Refiners and importers — called “obligated parties” — use RINs to show the Environmental Protection Agency that they have fulfilled their mandated government use of renewable fuels. If the obligated party has not used enough physical product, it can buy RINs to satisfy the quota.

The market is hedging possible policy relief to refiners by selling RBOB and ULSD cracks said S&P Global Platts analyst Sergio Baron.

The ICE New York Harbor RBOB crack versus Brent fell to $16.20/b in afternoon trading, down more than $1 from a close of $17.27/b June 15 and on pace for the weakest close since Feb. 25.

NYMEX July WTI settled 3 cents higher at $72.15/b and ICE August Brent climbed 40 cents to $74.39/b.

Total US commercial crude stocks saw a 7.35 million barrel draw in the week ended June 11, EIA said, leaving them at 466.67 million barrels — a four-month low.

Market reaction to the crude draw was muted by bullish expectations for the EIA inventory report.

American Petroleum Institute data released late June 15 had reported an 8.54 million barrel draw in US crude inventories in the week ended June 11.