Gasoline Spot Prices Near Their Lowest Levels of the Year

Energy markets are trying to bounce Tuesday after another wave of selling pushed spot prices for gasoline in several US markets near their lowest levels of the year.

LA-Spot CARBOB basis values had another large sell-off Monday, bringing differentials to their lowest premium to futures since August, and cash prices in both LA and San Francisco to their lowest levels since January. Unfortunately for California’s consumers, despite wholesale gasoline prices in the state running only about 20 cents above their US Gulf Coast counterparts, retail prices are still averaging $1.70 more thanks in large part to the excessive amount of taxes and fees levied on fuel in the state. See tables below.

OPEC continued its recent pattern of reducing its demand forecasts in its November monthly oil market report despite increasing its forecast for global economic activity. Robust activity in the US economy and Chinese stimulus were both cited for the tick higher in the global economic projections, while demand estimates slipped after the actual figures for the first 3 quarters of 2024 came in below previous estimates. The report also highlighted a recovery in refining margins during October as heavy maintenance in the Atlantic basin helped lift diesel margins after 2 months in which many plants were underwater.

The OPEC report predicts that US production of oil and natural gas liquids will continue to grow next year, leading the global increase in supply, while US biofuel production is expected to be close to flat. In total, tight oil supplies make up 9 million barrels/day of the US record-setting 13.5 MMBPD of oil production, while NGLs make up 5.7 million, and biofuels come in around 1.6 million barrels/day.

Former New York Congressman Lee Zeldin has been pegged to become the new administrator of the EPA next year, with pledges to roll back several of the current administrations policies included with the nomination. It appears that republicans are poised to have a majority in both congressional chambers, which will make changing current policies less complicated, with one of the early targets appearing to be the vehicle emissions standards that were effectively unattainable with current ICE technology. On the other hand, several of the threatened IRA programs may be harder to change as many of those incentives are pointed at red states.

Delek reported another upset at its Big Spring TX refinery which has become a frequent flier in the TCEQ reporting. This time it was an upset in a Saturated Light End (SLE) unit that cause excessive emissions for roughly 9 hours.

Today’s interesting read courtesy of the Financial Times: Why methane emissions are the low-hanging fruit of the cleaner fuels battle, and why they’re still so challenging to control.

Hurricane Rafael has largely dissipated over the Gulf of Mexico but it looks like we won’t get through this season without one more named storm. The NHC now gives 80% odds of a system being named in the Western Caribbean over the next 7 days, with a chance that it could become a named storm heading towards Florida next week. Fortunately cooler waters should keep this new system from becoming a major hurricane, but with the beating Florida has already taken this year, any storms will be unwelcome at this point.