U.S. Gulf Coast gasoline weakened for a second day after a government report showed regional inventories reached the highest level for this time of year since 2010, and before futures roll from September to cheaper October contracts.
Stockpiles of motor fuel on the Gulf Coast, known as PADD 3, climbed 929,000 barrels last week to 76.6 million barrels, according to the U.S. Energy Information Administration. September gasoline futures settled at $3.0945 a gallon today, 13.29 cents higher than October futures. The gap was 12.14 cents yesterday. The September contract expires on Aug. 30.
“That spread has been running 12 to 14 cents,” said Steve Mosby, president of ADMO Energy LLC in Kansas City, Missouri. “When the rubber hits the ground, when you actually get to a cash-delivered barrel, you have to account for that spread in your basis. The back end is not going to come up, the front end is going to come down as the season ends.”
The discount for conventional, 85-octane gasoline, or CBOB, on the Gulf Coast widened 3.5 cents to 11.5 cents a gallon versus New York Mercantile Exchange futures at 4:04 p.m., according to data compiled by Bloomberg. Reformulated gasoline, known as RBOB, fell 2 cents to 6.5 cents a gallon below futures.
West Texas Intermediate for October delivery rose $1.09 to $110.10 a barrel at settlement, and its discount to benchmark Brent oil widened to $6.51, according to data compiled by Bloomberg.
The 3-2-1 crack spread on the Gulf Coast, a rough measure of refining margins based on WTI in Cushing, Oklahoma, declined by 6.1 cents to $14.18 a barrel. The same spread based on Light Louisiana Sweet oil fell 51.1 cents to $10.93 a barrel.