U.S. RBOB Futures Rise on Higher RINs Prices
U.S. gasoline futures rose nearly 4 percent on Tuesday morning on higher requirements for refiners to meet U.S. renewable fuel requirements, traders said.
U.S. gasoline futures on the New York Mercantile Exchange were up 3.5 percent at $1.35 a gallon at 10:28 a.m. EST, outpacing both the U.S. crude and the global crude benchmark. The RBOB crack spread rose to $15.18 a barrel, the highest since August of last year.
The Environmental Protection Agency on Monday afternoon raised renewable fuel requirements more than expected from an earlier proposal, making it more costly to blend gasoline.
"The boost in RINs is working its way into RBOB prices, combining with refinery issues to rally prices strongly," said Matt Smith, an analyst at Clipper Data.
Analysts say the cost of the higher requirements will be absorbed by refiners, influencing future prices.
The physical gasoline market in the New York Harbor has been tight for weeks, as imports into the East Coast have been near record lows for three consecutive weeks, according to weekly data from the U.S. Energy Information Administration. Those cargoes have been snatched by West Africa, South America and Northwest Europe, traders say.
The fears of a tight market come as Irving Oil has halted production on a gasoline-producing unit at its 300,000 barrel per day (bpd) St. John, New Brunswick, refinery, according to a report released on Monday by Energy News Today.
The refiner shut the 70,000 bpd fluid catalytic cracker (FCC) following a mechanical issue, the report said. The FCC went into maintenance in early September and was slated for completion by Nov. 15.
(By Jarrett Renshaw)
