5-25-07 by Court
The Oil Price Information Service (OPIS), a pricey oil industry insider news wire, is reporting that gasoline prices on the "spot market" are falling like a rock. The change isn’t as dramatic in the California or New York, but it’s pretty clear that the new Congressional hearings, legislation, and press conferences have spurred refiners to increase production at their downed refineries.
Oil companies say they don’t want price controls, but they sure do open the valve on the flow of gasoline from refineries whenever the political pressure gets hot.
Here’s what OPIS is reporting to those with the cash to subscribe:
SPECIAL BULLETIN: GAS PLUNGES IN NYMEX, KEY SPOT MARKETS
Gasoline prices in the big bulk markets saw some huge drops this
afternoon, outpacing the 9cts/gal-plus losses registered for NYMEX RBOB
futures. There were some markets that were off by as much as 20cts/gal
for unleaded regular gasoline during various parts of the day.
There was no single factor to account for the huge drop, although many
market watchers sense it was an action long overdue given the fact that
gasoline was trading at huge margins versus crude oil. June RBOB futures
were last quoted at $2.3095/gal, down 9.18cts/gal on the day. The losses
were being sustained in the electronic market with fairly busy action
after the pit trading closed.
Midwestern and Gulf Coast gasoline markets were down by amounts that
just a few years ago represented full monthly changes. Group 3 gasoline
was last trading at $2.5045/gal for unleaded regular, down 19.2cts/gal
from yesterday. Whereas this product commanded 40-50cts/gal over NYMEX
futures last week, the basis premium has narrowed to about 19.5cts/gal.
Chicago gasoline also was hammered, dropping 11.95cts/gal on the day to
$2.732/gal, or some 42.25cts/gal above futures. That is still a very
hefty premium to the NYMEX, so there is as yet no sense of comfort in
that market.
Gulf Coast unleaded was busy and sellers were willing to discount the
NYMEX by 4.5cts/gal, pushing prices to about $2.265/gal. A week ago, we
saw this grade trade in excess of $2.50/gal, and today’s number
represented a one-day loss of nearly 16cts/gal.
New York and California spot markets did not see the same frantic
selling as was common at the Gulf Coast and in the Midwest. N.Y.
conventional gasoline lost about 10cts/gal to $2.2295/gal and RBOB
slumped to about $2.35/gal.
The West Coast dropped in sympathy with other markets but there is
some nervousness there attached to an upcoming major turnaround at
Chevron’s El Segundo refinery. Cash RBOB prices fell just 4.75cts/gal
today to $2.515/gal.
Diesel prices were also much weaker, but gasoline was clearly the
story. Most diesel markets were down 4-6cts/gal, perhaps just narrowly
outpacing NYMEX futures losses.
OPIS Staff ReportAs the report shows, in the West, a single refinery problem, as is anticipated at Chevron’s El Segundo facility, can keep gasoline prices higher than the rest of the nation. It’s another reason we need refinery regulation and political pressure shouldn’t let up when gasoline prices take a brief slide.