MARKETWIRE ALERTS

MARKETWIRE ALERTS 

MarketWire Afternoon News April 2nd:

Updated at 5:00 PM ET 

HEADLINES:

— PNW Sub-Octane Premium Falls 13cts on Softer Offers

— AAR: Petroleum Carloads Up 11.2% for Week Ended March 28

— Analysis: USGC $100 Jet Fuel Crack Strains Fuel Balance

— WTI in First Premium to Brent in 4 Yrs, Amid Hormuz Crisis

— DTN: Diesel Liftings Slumped Amid Price Surge

— CEC: California Gasoline Stocks Climb 723,000 Bbl on Week

— EIA: US NatGas Storage Reports 36 Bcf Weekly Injection

— CEC: California Diesel Stocks Climb 12,000 Bbl on Week

— U.S. Rack ULSD Up 1.65cts; Gasoline Falls 10.8cts

NEWS:

PNW Sub-Octane Premium Falls 13cts on Softer Offers

Pacific Northwest sub-octane gasoline premium was heard offered at 50cts on Thursday (4/2), moving the basis down by 13cts to a 49.5cts premium to the May NYMEX RBOB futures contract, reflecting softer market sentiment amid easing buying interest.
Market participants indicated the weaker structure followed reduced spot demand, with sellers adjusting offers lower to clear available barrels into the regional system.
PNW sub-octane regular gasoline was also offered weaker, heard at plus 5cts offer, moving the basis down by 7cts to a 4.5cts premium to the front-month NYMEX RBOB futures contract, underscoring broader softness across gasoline blending components in the Pacific Northwest.
The declines come as the West Coast gasoline complex continues to balance adequate supply against uncertain demand patterns, while refinery rationalization across the region and ongoing geopolitical tensions tied to Middle East crude flows remain supportive underlying factors for price volatility.

AAR: Petroleum Carloads Up 11.2% for Week Ended March 28

The Association of American Railroads (AAR) reports that petroleum and petroleum product carloads totaled 11,239 during the week ended March 28, up by 11.2% from the same week a year ago.

Year-to-date, petroleum and petroleum products carloads totaled 131,039, up 7.3% from the corresponding period of the prior year, an AAR report published on Wednesday (4/1) showed.

Weekly traffic for the profiled week totaled 515,921, up 0.5% from the same week a year ago.

Total carloads for the week ended March 28 reached 233,833, down by 0.8% from the same week of last year.

Weekly intermodal volume was 282,088 containers and trailers, up 1.6% from the corresponding week of the prior year.

Year-to-date, U.S. railroads reported carloads at 2,684,108, up 4.2% on the year.

Cumulative intermodal units were 3,311,403, down 0.2% from a year ago.

Total rail traffic for the first 11 weeks of the year was 5,995,511 carloads and intermodal units, up 1.7% on the year.

Analysis: USGC $100 Jet Fuel Crack Strains Fuel Balance

U.S. Gulf Coast jet fuel crack spreads have surged above $100 bbl for the first time on record, signaling a tectonic shift in refinery economics that threatens to tighten the broader U.S. fuel balance.

The unprecedented triple-digit pricing creates a massive margin incentive that is increasingly drawing production away from the gasoline pool just as the summer driving season approaches.

The current market disparity highlights a growing tension across the refined products barrel, driven by tightening global supply flows and ongoing Middle East disruptions. While gasoline demand has yet to fully align with seasonal norms, the overwhelming premium for middle distillates is forcing refiners to prioritize jet and diesel yields over motor fuel production.

Global supply risks linked to tensions involving the Strait of Hormuz — a transit point for roughly 20% of global oil flows — have already begun to impact middle distillate markets, particularly jet fuel, which relies heavily on medium sour crude streams originating from the region. Disruptions and rerouting of these flows have tightened availability of jet fuel globally, with the effects increasingly reflected in U.S. Gulf Coast pricing.

U.S. jet fuel demand, as measured by product supplied from the U.S. Energy Information Administration (EIA), rose to 1.785 million bpd in the most recent week, up 14.6% week-on-week and 9.8% year-on-year.

On the supply side, U.S. exports are reinforcing the pull on distillate barrels. Jet fuel exports increased 8.3% week-on-week to 380,000 bpd, while distillate exports climbed 19.2% on the week to 1.406 million bpd. Meanwhile, gasoline exports declined 4.7% to 829,000 bpd, indicating more gasoline is being retained domestically even as distillates are drawn into global markets.

The most significant change was seen in Gulf Coast jet fuel crack spreads as they climbed above $100 bbl in March, according to DTN Energy data. Ultra-low sulfur (ULSD) crack spreads have traded in the mid-$80s bbl range in recent sessions.

Meanwhile, Gulf Coast RBOB gasoline crack spreads have lagged near $25 bbl to $30 bbl, underscoring a margin differential of roughly $70 bbl versus gasoline and $15 to $20 bbl against ULSD.

Not Just USGC Problem

That pricing is not isolated to the Gulf Coast, with Chicago jet fuel now at $5.36 gallon, up $2.88 from February 27, New York at $4.87 gallon, up $2.36, and Los Angeles at $4.61 gallon, up $1.99, reflecting a broad repricing across major U.S. hubs. The scale of the move, approaching $2 to nearly $3 gallon in just over a month, underscores how quickly tightness in middle distillates has translated into outright price pressure across regions.

Gasoline margins, while improving seasonally, have not kept pace. With gasoline demand at 8.686 million bpd, approaching seasonal norms, the weaker relative margin structure suggests refiners may not increase gasoline output to the same extent as in prior years. Distillate cracks are running roughly $30 to $35 bbl higher than comparable levels during the same period last year, reinforcing the shift in refinery economics.

The implication is not an immediate gasoline shortage, but a tightening balance across the barrel. As jet fuel continues to draw strength from global supply disruptions and sustained demand, and as distillate exports remain above 1.1 million bpd, the economics favor distillate production over gasoline.

If these trends persist – including jet crack spreads at above $100 bbl, ULSD cracks in the mid-$80s and continued strong backwardation in distillate futures – the strength currently in jet fuel could bleed into the distillate pool and begin to constrain gasoline supply just as the U.S. enters peak driving season.

WTI in First Premium to Brent in 4 Yrs, Amid Hormuz Crisis

The crude oil market entered a rare and significant structural shift on Thursday (4/2), with West Texas Intermediate (WTI) futures trading at a premium to ICE Brent for the first time since 2022.

Thursday’s spread between both crude benchmarks stood at $3 bbl, compared to the $0.68 spread reached on May 20, 2022 — the last time when the front-month in NYMEX WTI was at a premium to Brent, a month after Russia invaded Ukraine. 

The inversion of the WTI-Brent spread coincided with fears of tightening domestic supply as U.S. President Donald Trump issued fresh escalation threats in the month-long war against Iran.

After four years of trailing Brent, the shift in WTI reflects a desperate scramble for immediate barrels in the U.S. Gulf Coast as export demand reaches record levels. It reflects a “scarcity mindset” among refiners willing to pay a premium for prompt versus deferred crude with the Middle East’s Strait of Hormuz closed to a fifth of world oil cargoes.

By 09.30 a.m. ET, NYMEX WTI futures for May delivery were at $112.86 bbl while the ICE Brent contract for June stood at $109.09 bbl.

The flip in the spread was driven by extreme backwardation, where prompt prices were significantly higher than those for future delivery.  May WTI front-month was about $10 bbl higher than June while June Brent was about $13 bbl above July.

“It’s hard to see oil sustaining a move below $100 without a clearer timeline — and more importantly, credibility — around reopening Hormuz,” Fawad Razaqdada, analyst at StoneX in London, said in a note. “Until then, dips are likely to be shallow in oil prices.”

WTI’s move to a premium against Brent comes as U.S. refined product exports last week soared to the highest on record, Energy Information Administration data showed. International demand for U.S. petroleum products has picked up measurably as refiners and consumers worldwide scramble to replace shut-in Middle East supply and reduced Asian production.

“The conflict in the Middle East has the potential to be the largest oil supply disruption in history if oil flows via the narrow Strait of Hormuz remain low or come to a halt,” noted Karim Fawaz, director of global fuels and refining at S&P Global Commodity Insights.

Fawaz observed that since the conflict began escalating on February 28, refined products markets have been upended, and the situation was evolving rapidly.

“Flows through the Strait of Hormuz have ground to a halt, refineries and ports have been attacked, and crack spreads are rapidly closing in on highs last seen in the immediate aftermath of the start of the Russia-Ukraine conflict.”

In contrast to the present situation, the Brent-WTI spread widened significantly during the Russia-Ukraine conflict, hitting nearly $20 bbl. Europe was then abruptly cutting off from millions of barrels of Russian crude and vacuum gas oil. The phenomenon drove Brent — the international benchmark — to a huge premium as it absorbed the direct impact of the sanctions and rerouting costs.

DTN: Diesel Liftings Slumped Amid Price Surge

Following the Iran-war induced surge in fuel prices, rack liftings of #2 diesel slumped nationwide in March, according to DTN refined fuels data. Demand recovered to pre-war levels after prices settled at a new, much higher level.

Nationwide rack liftings of ultra diesel pulled back amid the initial price spike. On the seven-day moving average, they fell more than 7% between early and mid-March. Wholesale fuel prices rocketed in that same time frame. The average rack price for #2 diesel on the Gulf Coast, for instance, shot up from $2.69 gallon antebellum to $3.68 gallon a week later and topped $4.5 gallon by the third week of the war, DTN pricing data showed. Prices have since oscillated in the $4.2-$4.5 gallon range.

This initial brief trough and subsequent recovery in diesel liftings was operational in nature. The longer prices stay this high, however, the larger the risk of actual demand destruction. For now, markets have absorbed the initial supply shock fairly well given the scale of the disruption, and the domestic refined fuels market is relatively shielded from the ongoing turmoil in the Middle East compared to Asia and Europe.

Some regions in the U.S., however, are more exposed to the conflict than others. California refiners rely much more heavily on crude oil imports from the Middle East than those on the Gulf Coast, especially for their supply of medium and heavy grades. Most consumed fuel is produced in state, and refining capacity is limited compared to other regions.

This fact was reflected in last month’s spot market movements. Diesel spot prices across the country have in late March surged above the highs reached in the first months of Russia’s invasion of Ukraine in 2022, with the rally being most pronounced in PADD 5. ULSD spot prices in Houston, for instance, rallied around 85% since the start of the war, compared to the doubling that occurred in Los Angeles, where the differential to ULSD shot up to $0.85 gallon, according to DTN data. This should be replaced with Diesel#2 data. 

Oil and product futures prices have been highly volatile since the start of the conflict, with conflicting headlines leading to significant intraday swings. This volatility bled into the spot and rack market. Diesel at the rack has over the past four weeks been regularly subjected to day-to-day price swings of 5% to 10%.

CEC: California Gasoline Stocks Climb 723,000 Bbl on Week

California Energy Commission data show statewide gasoline inventories increased in the week ending March 27, as the agency continues to report only statewide totals in its Weekly Fuels Report.
Statewide gasoline stocks, including CARB reformulated, non-California, and blending components, climbed by 723,000 bbl to 9.608 million bbl, but remained 9% lower than last year.
Statewide gasoline production fell by 481,000 bbl to 4.606 million bbl, and production was 17% below last year’s levels.
 

The California Energy Commission is currently publishing only statewide gasoline inventory and production data and is no longer providing regional Northern and Southern California breakdowns.

EIA: US NatGas Storage Reports 36 Bcf Weekly Injection

Energy Information Administration data released midmorning Thursday (4/2) show a 36 billion cubic feet injection into U.S. natural gas storage to 1.865 trillion cubic feet in the week ended March 27. Natural gas in U.S. storage is 5.4% higher than last year and 3% above the five-year average of 1.811 Tcf.
Regionally, EIA reports the East registered a 1 Bcf withdrawal to 270 Bcf, 5.6% less than a year ago and 13.5% lower than the five-year average.
Natural gas in storage in the Midwest decreased 1 Bcf week-on-week to 350 Bcf, a 3.8% deficit compared to the same week a year ago and 13.4% lower than the five-year average.
Mountain region natural gas in storage increased 4 Bcf, up 26.1% year-on-year to 70.5% above the five-year average.
South Central storage rose 34 Bcf to 779 Bcf, 3.5% more than in the same week last year and 2.6% below the five-year average.

CEC: California Diesel Stocks Climb 12,000 Bbl on Week

California Energy Commission data show statewide distillate fuel inventories increased in the week ending March 27, as the agency continues to report only statewide totals in its Weekly Fuels Report.
Statewide diesel stocks, including CARB diesel and other diesel fuel, climbed by 12,000 bbl to 2.526 million bbl, still14% lower than last year.
Statewide diesel production dropped by 21,000 bbl to 1.436 million bbl, and production was 3% below last year’s levels.
 

The California Energy Commission is currently publishing only statewide diesel inventory and production data and is no longer providing regional Northern and Southern California breakdowns.

U.S. Rack ULSD Up 1.65cts; Gasoline Falls 10.8cts

Wholesale rack prices for ultra-low sulfur diesel (ULSD) and gasoline moved in opposite directions Thursday (4/2), with diesel edging higher while gasoline declined across all regions, as futures prices surged on escalating geopolitical tensions tied to the Iran war.

Nationwide ULSD rack prices averaged $4.1529 gallon, up 1.65cts from Wednesday’s $4.1364 gallon, according to DTN data. Conventional unleaded gasoline rack prices averaged $3.1623 gallon, down 10.83cts from $3.2706 gallon.

Futures prices moved sharply higher Thursday morning. Front-month May NYMEX ULSD futures climbed 52.00cts to $4.5768 gallon, while May RBOB gasoline futures increased 18.40cts to $3.2754 gallon. WTI crude for May delivery surged $12.28 to $112.40 bbl.

The rally in futures followed renewed escalation signals in the Middle East conflict, after U.S. President Donald Trump said strikes on Iran would intensify over the next two to three weeks and indicated the U.S. would not take steps to reopen the Strait of Hormuz. The comments reinforced supply concerns tied to the region, where flows remain heavily constrained.

Despite the sharp move higher in futures, rack price direction remained mixed, reflecting uneven physical market response following recent volatility.

ULSD racks were mixed across regions Thursday. Midwest ULSD posted the only notable increase, rising 15.69cts to $3.8380 gallon, while East Coast prices declined 5.70cts to $4.2526 gallon. Gulf Coast values fell 5.12cts to $4.1739 gallon, and West Coast prices dropped 8.99cts to $5.3524 gallon, maintaining the strongest regional premium. PADD 4 edged slightly lower by 0.45cts to $3.9217 gallon.

Relative to the national ULSD rack average of $4.1529 gallon, PADD 5 held the widest premium at $1.1995 above the U.S. benchmark, followed by PADD 1 at 9.97cts above and PADD 3 at 2.10cts above. PADD 4 traded below the national average, while PADD 2 remained the deepest discount at 31.49cts below the benchmark.

On conventional unleaded gasoline racks, all regions moved lower Thursday. Gulf Coast gasoline recorded the largest decline, falling 11.27cts to $2.9685 gallon, while West Coast prices dropped 11.10cts to $3.8404 gallon. East Coast values declined 10.58cts to $2.9986 gallon, Midwest gasoline fell 9.12cts to $2.6067 gallon, and PADD 4 decreased 8.63cts to $2.9026 gallon.

Compared with the national gasoline average of $3.1623 gallon, PADD 5 remained the only region trading at a premium, at 67.81cts above the benchmark. All other regions held discounts, led by PADD 2 at 55.56cts below the national average, followed by PADD 4 at 25.97cts, PADD 3 at 19.38cts, and PADD 1 at 16.37cts.

Premium gasoline rack prices declined across all regions, broadly in line with conventional gasoline. Midwest prices posted the largest drop, down 11.77cts to $3.2164 gallon, while West Coast premiums remained elevated at $4.2335 gallon despite a 11.08cts decline.

The sharp move higher in futures alongside weaker gasoline rack prices reflects a disconnect between paper and physical markets, with futures reacting quickly to renewed supply risk while rack values remain driven by near-term buying patterns and regional supply conditions.