Low Gasoline Stocks Indicate Increased Odds of Spring Volatility
- We cannot just focus on distillate. Gasoline will likely be our next major concern.
- Gasoline stock levels have fallen well below the typical band for this time of year, primarily for the same reason distillate stocks fell to low levels -- namely relatively low production due to low margins. At the end of January, total gasoline inventories were almost 13 million barrels (6%) below the low end of the normal band.
- While gasoline stocks are generally not as important a supply source to the gasoline market this time of year as are distillate stocks to the distillate market, gasoline stocks still are needed. Gasoline stocks are usually used to help meet gasoline demand during February and March as refiners go through maintenance and turnarounds, but we do not have the volumes in place now to cover the usual draw.
- Even with delayed maintenance, we are likely to be facing the beginning of the gasoline season with low stocks.
- Any short-term supply disruptions, such as those that sometimes occur when refineries are coming out of their turnarounds in April and ramping up production, would likely create price volatility.