RBOB surges over 5% after larger-than-expected US gasoline draw

NYMEX RBOB futures settled at a ten-day high Aug. 25 on the back of a larger-than-expected US gasoline inventory draw.

NYMEX front-month September RBOB settled up 12 cents, or about 5%, at $2.3008/gal while September ULSD climbed 5.14 cents to settle at $2.1182/gal.

Total US gasoline stocks declined 2.24 million barrels in the week ended Aug. 20, US Energy Information Administration data showed Aug. 25, leaving stocks 3.2% behind the five-year average and at the lowest since October 2020.

Analysts surveyed by S&P Global Platts Aug. 23 had called for a 1.5 million-barrel draw, while American Petroleum Institute data released late Aug. 24 pointed to a 985,000 barrel decline in gasoline inventories over the period.

The draw was concentrated on the US Atlantic Coast where stocks fell 2.32 million barrels to 56.38 million barrels, the lowest since the week ended March 23, 2018. USAC gasoline stocks are now down over 14 million barrels since their most recent peak during the week ended June 25 and are nearly 13% behind the five-year average for this time of year.

The ICE New York Harbor RBOB crack versus Brent rallied to $17.66/b in afternoon trading, up from an Aug. 24 close of $15.37/b.

The US gasoline draw added momentum to market bulls eyeing a robust demand recovery in the aftermath of the COVID-19 delta variant surge.

"The most serious concerns about demand, which are what had triggered [last week's] price slide, have faded away," Commerzbank energy analyst Carsten Fritsch wrote in a note Aug. 25. "This is thanks in part to news from India, the third-largest oil consumer, which showed a considerable rise in crude oil imports and a further increase in crude oil processing in July. According to data from the Ministry of Petroleum, imports soared by 21.8% year on year to 15 million mt."

India was one of the first countries that had to grapple with the more contagious delta coronavirus variant, and crude bulls will take some positives from the fact that the economy is resuming after a prolonged lockdown.

The recent surge in US cases has shown signs of slowing in recent days. The seven-day moving average of new US COVID-19 cases was 142,029 on Aug. 24, US Centers for Disease Control and Prevention data showed, the highest since January but within 500 of its most recent peak Aug. 21.

Total US commercial crude stocks fell 2.98 million barrels to 432.56 million barrels, EIA said, marking a fresh 19-month low.

The draw was largely in line with market expectations. Analysts surveyed by S&P Global Platts Aug. 23 had called for a 3.2 million-barrel draw over the period.

NYMEX October WTI settled 82 cents higher at $68.36/b and October Brent finished up $1.20 at $72.25/b.

Notably, stocks at the NYMEX delivery point of Cushing, Oklahoma, climbed 70,000 barrels to 33.67 million barrels. The build marks the first time Cushing stocks have expanded since the week ended June 4. The ten-week slide has seen inventories at the storage hub drain 12 million barrels since early June. Even after last week's build stocks remain around 30% behind the five-year average.