New York gasoline futures settled lower by 8 points yesterday, resisting the upward pressure of the rest of the energy complex, after seeing the first build in inventory levels of the summer driving season. The prompt month diesel contract settled up almost 2.5 cents, West Texas Intermediate gained just over 50 cents on the day.
Both gasoline and diesel demands are close to record highs but cannot seem to keep up with refinery runs which have been hanging around the nosebleed section since mid-March. To exacerbate the situation, gasoline exports have dropped off for a second week in a row which is the main culprit for the unseasonal build in inventories.
This morning’s rally looks to break WTI out of its high set earlier this month. August 1st had the crude benchmark top out at around $50.50 and has since fallen. If broken today, not much stands in the way of crude prices running up to the $51-52 range and taking refined products along for the ride.