Petroleum Products

Gasoline prices: The front-month futures price of reformulated blendstock for oxygenate blending (RBOB, the petroleum component of gasoline used in many parts of the country) settled at $1.48 per gallon (gal) on January 7, 2021, up 26 cents/gal from December 1, 2020 (Figure 2). The RBOB–Brent crack spread (the difference between the price of RBOB and the price of Brent crude oil) increased by 10 cents/gal to settle at 19 cents/gal during the same period.

Seasonally low inventory builds and expectations of increased consumption in 2021 were two factors that likely contributed pressure to increase the RBOB–Brent crack spread in December. EIA estimates that U.S. motor gasoline inventories in December were less than the five-year (2015–2019) average, and the monthly inventory build of 3.2 million barrels was low compared with the month’s five-year average build of 13.2 million barrels. Expectations of increased gasoline consumption in the first half of 2021 also likely contributed to the increased crack spread. EIA forecasts that U.S. gasoline consumption will increase from 8.13 million barrels per day (b/d) in the fourth quarter of 2020 to 8.49 million b/d on average in the first half of 2021, an increase of 0.36 million b/d (4%).

Ultra-low sulfur diesel prices: The front-month futures price for ultra-low sulfur diesel (ULSD) to be delivered in New York Harbor settled at $1.54/gal on January 7, 2021, up 19 cents/gal from December 1, 2020 (Figure 3). The ULSD–Brent crack spread (the difference between the price of ULSD and the price of Brent crude oil) increased by 3 cents/gal to settle at 24 cents/gal during the same period.

Despite distillate consumption decreasing to its lowest December level since 2012, December’s average distillate crack spread moved closer to the month’s five-year (2015–19) average for the third consecutive month. Although distillate stocks increased during December because of low consumption and high imports, the increase in stocks during December was less than the five-year average for the month because of low refinery production of distillate fuel. Ending stocks increased by 7.3 million barrels from November, compared with a five-year average build of 9.7 million barrels.