Gulf Coast spot gasoline prices rebounded after falling to their biggest discount to futures in 21 years yesterday as Colonial Pipeline Co. began a new shipping cycle.
Conventional, 87-octane gasoline on the U.S. Gulf strengthened 4.25 cents to a discount of 25.25 cents a gallon to futures traded on the New York Mercantile Exchange at 3:39 p.m., according to data compiled by Bloomberg.
The discount hit 29.5 cents a gallon yesterday, the lowest level since Bloomberg began assessing the grade in May 1991. Gross inputs of oil to refineries on the Gulf Coast climbed to 8.3 million barrels a day in the week ended Nov. 30, the highest level since at least 1992, the Energy Department said Dec. 5.
The discount may have been augmented by the fact that it was the last day of the 69th shipping cycle for Colonial, Andy Lipow, president of Lipow Oil Associates LP in Houston, said in a phone interview.
“It was precipitated by people liquidating their inventory,” Lipow said. “Pipeline scheduling was completed for that cycle. Today we just moved to a different cycle. You might see Gulf Coast gasoline weaken in the next couple of days as we move to the scheduling day in the final day of trading.”
Colonial can carry more than 1.4 million barrels of product a day on its gasoline mainline from Houston to Greensboro, North Carolina. The pipeline ships products in five-day cycles that run back to back. The 70th cycle began today.
Ultra-low-sulfur diesel in the Gulf rose 0.25 cent to a discount of 0.88 cent a gallon to heating oil futures on the Nymex.
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