2017-03-28 03:57:39 EDT
Futures Rise Across the Board; Gasoline Ready for Take-Off?

Petroleum futures posted solid gains today, and indeed there are signs that only
a disappointment from EIA tomorrow could derail what may be a seasonal run
higher in gasoline that could pull crude up as well. Nothing spectacular has
been witnessed for futures quotes, but cash markets have quietly flexed some
muscles in a couple of regions where refinery downtime is significant.

Crude oil prices moved higher despite a gain of more than 0.5% in the U.S.
dollar, which might promote some oil selling under normal circumstances. There
was trader optimism that any stock build tomorrow will be limited, and crude
also benefited from delays in some export loadings out of Libya. May WTI saw
moderate volume throughout the day with modest selling on the close that limited
the contract to a 64cts/bbl increase, putting it at $48.37/bbl. The May Brent
number was last quoted at $51.30/bbl, up 55cts/bbl on the day.

RBOB for April rose 1.6cts/gal to $1.6349/gal with May futures inching up
1.01cts/gal to $1.6364/gal. But once again, there were some more spectacular
gains in a few cash markets. The red hot Pacific Northwest tracked all the way
up to more than $1.85/gal, giving able refiners there a gas crack of as much as
$28/bbl versus local crude. East of the Rockies spot gasoline generally rose 2-
2.6cts/gal while California saw more modest 1.5ct/gal increases. There is a lot
of nervousness about California, however, given the major turnaround that will
begin next week at the storied Torrance refinery.

A nationwide gasoline stock draw is expected tomorrow and indeed, bulls in
gasoline don't have any excuses for a strong finish to March and strong
beginning for April. Consumer confidence numbers released today were as high as
they've been in 16 years and there were no horrible weather issues last week to
curb a spring demand spree.

Ethanol prices also rose on a day when most U.S. assets were bid higher. Near-
term ethanol prices were up 1.7-1.8cts/gal.

Diesel was quiet, but there are some who believe that long-term buyers may rue a
missed opportunity to buy some diesel at less than $1.50/gal. Today saw April
and May ULSD futures settle at $1.5167/gal and $1.5201/gal, reflecting gains of
1.42cts/gal and 1.16cts/gal.

--Tom Kloza, tkloza@opisnet.com



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