Midcon natural gasoline, V-grade prices diverge

OREANDA-NEWS. March 20, 2015. Conway natural gasoline's discount to Group Three sub-octane motor gasoline has widened by 35pc since the start of the week, as the spot price for the two products diverged sharply alongside refinery outages.

Natural gasoline is blended into the gasoline pool year-around at many midcontinent refineries. In the winter, some pipeline-connected refiners on allocated systems will opt to blend normal butane, a less expensive blendstock with a high Reid vapor pressure (RVP) that is only permitted for blending in the winter. Current demand for butane has weakened significantly following a transition to lower RVP specifications, which should support natural gasoline prices. However, refinery planned and unplanned outages across the midcontinent have damped natural gasoline buying interest.

On 16 March Conway natural gasoline averaged roughly a 52? discount to Group Three sub-octane gasoline, in line with the 57? average discount seen last March. That differential widened to 70.2?/USG on yesterday as natural gasoline prices fell 6.4pc from the start of the week to 99.25?/USG, and motor gasoline values rose by 7.2pc to \\$1.6941/USG.

Several midcontinent refineries have experiences planned or unplanned outages this week, including Phillips 66's 356,000 b/d Wood River, facility in Roxana, Illinois; a gasoline producing unit at BP's 410,000 b/d Whiting, Indiana, facility; and some units at ExxonMobil's 240,000 b/d Joliet refinery in Channahon, Illinois.

With front month Conway natural gasoline prices weak on tepid demand and the market in a contango structure, more traders have moved barrels into April, collecting between 0.375-0.5?/USG on spread trades. At least 50,000 bl were rolled yesterday, and interest has carried over into today to move barrels into the forward month.