RBOB Gasoline Extends Rally As Inventories Fall

RBOB gasoline futures are trading higher for a 5th straight day, and have added nearly 20 cents/gallon since bottoming out at $1.88 on April 9th.

Fundamentally you can argue the recovery rally makes sense gasoline inventories across the US declined for a 7th straight week – following the typical drawdown as we move through the spring RVP transition – but then again consumption estimates from the DOE show declines from 2024 and 2023 levels for a 6th consecutive week. Technically it looks like RBOB futures are going to make a run at the 200 day moving average just below the $2.12 range, which should help determine if this is a start of a bull market, or just a temporary bounce after prices plunged 45 cents in 5 days.

Energy traders seemed to largely ignore the FED chairman’s speech Wednesday which warned about negative impacts on tariffs and justified why the FOMC won’t be cutting rates near term. Those statements sent equity markets sharply lower on the day, and continued the recent pattern of energy and equity asset classes trading independently of one another after moving in lockstep for several weeks. The President certainly didn’t ignore the statements however, calling for the chairman’s “termination” overnight, which may need to be clarified today so people know he’s talking about his job.

The big news for fuel markets Wednesday was Valero’s announcement that it was planning to “idle, restructure, or cease operations” at its Benecia (San Francisco) California by April 2026. Less noted in the press release was that the company was also writing down the value of its Wilmington (LA area) facility in the $1.1 billion impairment charge they’re recording as they continue to evaluate alternatives for that facility. The announcement of the 3rd of 5 San Francisco area refineries set to close in just 5 years comes just 10 days after Benecia’s city council passed an ordinance giving them and a citizens oversight commission the ability to issue fines, and now those officials are left to scramble to see what can be done to prevent that facility from closing permanently.

Meanwhile, another renewable producer filed for Bankruptcy protection as that industry continues to be battered by a drop in subsidies this year, and feedstock challenges as biofuels aren’t enjoying the same tariff exemptions as refined products. Global Clean Energy Holdings in Bakersfield CA had just finally started producing RD after years of being unable to meet its goals which caused ExxonMobil to back out of its participation in the facility. Vitol stepped into Exxon’s place and appears ready to support the bankruptcy proceedings, which may allow the facility to continue trying to produce RD near term.

More notes on the DOE’s weekly status report. See charts attached

Crude exports surged to a 2025 high (almost a one year high), but the increase in the adjustment to crude inventories held the headline value at a small build rather than a large draw. Refinery runs slid as increases in PADDs 1-3 were offset by reductions in PADDs 4 and 5. In PADD 3, Exxon resumed planned run rates at its Baton Rouge refinery last week. PADD 5’s PBF Torrance refinery attempted a restart following a month’s worth of unplanned repairs but had to shut back down after discovering a leak. Multiple issues with West Coast refineries have pushed run rates down to a 2025 low and far below the past two years, seasonally.

Refined product inventories drew almost 2mm barrels each. Diesel stocks continue to dwindle with large drops out of PADDs 1 & 2 last week and are now below average almost everywhere, except PADD 5 if you consider the amount of renewable diesel not being reported in the weekly stats. Gasoline inventories are down for the fifth straight week with a sizeable drop in imports. Total stocks fell just below average after last week’s draw, but that average is being drug down by the abnormally low West Coast levels as most PADDs are around or above their 5-year average.