August 13, 2015 / 12:28 AM / 4 years ago

U.S. gasoline spread surges most in years on refinery woes

A man gets gasoline at a BP station in St. Louis, Missouri January 14, 2015. REUTERS/Kate Munsch

NEW YORK (Reuters) - The premium for U.S. gasoline prices over benchmark crude has surged by more than $6 in three days, its biggest such rise in more than four years, as a series of refinery disruptions toward the end of an unusually strong summer driving season squeeze supplies.

U.S. RBOB gasoline futures jumped more than 4 percent on Wednesday, even as U.S. crude futures barely gained 0.5 percent, widening the so-called crack spread between the two to $31 a barrel intraday - nearly the highest level since 2013.

Before this week, the spread had slipped to below $25 a barrel, near its lowest since February, as U.S. gasoline inventories remained at relatively comfortable seasonal levels and dealers anticipated a seasonal slowdown in demand.

That changed in recent days, with at least three major refineries experiencing serious upsets that will cut into gasoline production, with weeks of summer demand to go. Some dealers are betting the rally will continue.

“Spreading opportunities are obvious and we continue to favor long gas (gasoline) cracks that appear poised for new wide territory,” Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a note to clients.

A 240,000-barrel per day (bpd) crude unit outage at BP Plc’s 413,500-bpd Whiting, Indiana, refinery on Saturday, expected to last at least a month, has helped boost gasoline futures along with an gasoline making unit outage at Philadelphia Energy Solutions’ refinery in Philadelphia and another at Phillips 66’s Bayway, New Jersey, plant.

On Wednesday, government data showed the country’s gasoline inventories fell 1.25 million barrels last week, a decline in line with the seasonal trend but relatively weaker compared to racing demand. U.S. consumption is running 6.6 percent higher than a year ago, according to the data. [EIA/S]

As of midday on Wednesday, gasoline futures had surged more than 8 percent this week, while U.S. crude futures have fallen by more than 1 percent.

The gasoline crack spread, a gauge of refiner profit margins measuring the difference between the price of crude oil and the selling price of finished products, reached $31 a barrel on Wednesday, highest since mid-July. The spread rallied after ending Friday at $24.30 a barrel.

Editing by Grant McCool

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