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Mystery mix of summer, spring RVP fuel puts USAC gasoline in flux

Houston — Atlantic Coast gasoline traders ventured Thursday into the guessing game of determining the breakdown of spring and summer product in New York Harbor storage, just a day away from the start of the transition to more expensive, lower-RVP fuel.

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The four-week average for gasoline stocks fell 1.50 million barrels to a seven-week low of 66.16 million barrels in the week ending March 8, but how much that product was worth was anyone's guess. The difference between 13.5 RVP and summer 9 RVP gasoline in the cash trade can be as much as 7 cents/gal.

"We definitely have drawn a lot of gasoline in the last two weeks," a US light ends source said of East Coast inventory. "This time of year is always tricky with not knowing what is in the tank. It could be skewed more summer than winter that it was last year and that could keep winter grade supported.

"Or it could be the reverse and mean summer grade could be stronger. It's always difficult to gauge."

Market sources said the trick was to maintain enough supply to avoid excess winter gasoline while not running short of the summer grade just as more drivers begin to hit the road.

Barges of spring 13.5 RVP gasoline for late March were heard Thursday morning at the NYMEX April RBOB futures contract minus 9.25 cents/gal, or around $1.76/gal. Barges of summer 9 RVP gasoline for mid-April were heard at the same time at the equivalent of NYMEX April RBOB minus 1.75 cents/gal, or about $1.8450/gal.

The US Energy Information Administration does not isolate summer and winter grade gasoline in its reports of stocks data. S&P Global Platts will assess Thursday New York Harbor gasoline at spring 13.5 RVP and will begin assessing a small percentage of the market at 9 RVP Friday, with the rest of the grades to follow at lower RVP starting March 29.

The spread between April and May RBOB futures will tell the tale of how much summer RVP gasoline was in storage, a second light ends source said. The spread was at about 1 cent Thursday morning in favor of April futures. If the spread were to tip dramatically in favor of May RBOB, that would signal short stocks of summer gasoline in New York Harbor, the source said.

--Jeffrey Bair, jeffrey.bair@spglobal.com

--Edited by Pankti Mehta, pankti.mehta1@spglobal.com