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 $1.43 per gallon (gal) on January 10 (Figure 2), mostly unchanged from December 3. The RBOB–Brent crack spread (the difference between the price of RBOB and the price of Brent crude oil) was also mostly unchanged during the same period, settling at -4 cents/gal.

The RBOB–Brent crack spread averaged 1 cent/gal in December, the lowest for that month since 2008. STEO estimates U.S. gasoline consumption decreased 2% year-over-year in December, bringing estimates of full-year 2018 U.S. gasoline consumption to show a decline compared with 2017, the first annual decline since 2012. Exports continue to remain an important source of demand growth for U.S. refiners, however. Weekly estimates of gasoline exports reached an all-time high in early December, totaling more than 1.3 million barrels per day.

The ultra-low sulfur diesel (ULSD) front-month futures price for delivery in New York Harbor settled at $1.91/gal on January 10 (Figure 3), an increase of 2 cents/gal from December 3. The ULSD–Brent crack spread (the difference between the price of ULSD and the price of Brent crude oil) increased by 2 cents/gal to settle at 44 cents/gal during the same period.

ULSD–Brent crack spreads fell in late December, but remained higher than the five-year (2013–17) average for December, averaging 43 cents/gal. STEO estimates U.S. distillate consumption was virtually unchanged year-over-year in December, at 4 million b/d, but estimates of full-year distillate consumption in 2018 were at the highest levels since 2007. Distillate inventories were 5% less than the five-year average at the end 2018, which could contribute to higher distillate prices or crack spreads if colder-than-normal weather leads to higher home heating oil consumption in the coming months.