U.S. Rack ULSD Falls 36.1cts; Gasoline Drops 13cts

DAVENPORT, FL (DTN) – Wholesale rack prices for ultra-low sulfur diesel (ULSD) and gasoline moved lower Monday (4/20), reversing Friday’s increases, as physical markets adjusted sharply downward despite a rebound in futures tied to renewed disruption in oil movements on the Strait of Hormuz.

Nationwide ULSD rack prices averaged $3.6004 gallon, down 36.10cts from Friday’s $3.9614 gallon, according to DTN data. Conventional unleaded gasoline rack prices averaged $3.1835 gallon, down 13.02cts from $3.3137 gallon.

Futures moved higher Monday morning. Front-month May NYMEX ULSD futures rose 13.51cts to $3.5325 gallon, while May RBOB gasoline futures increased 8.63cts to $3.0917 gallon. WTI crude for May delivery climbed $4.45 to $88.30 bbl.

The rebound in futures comes as markets remain as volatile as the U.S.-Iran ceasefire. Over the weekend, tensions picked back up after the U.S. seized an Iranian vessel, prompting Tehran to reimpose traffic restrictions in the Strait of Hormuz. Reports of Iranian gunboats engaging commercial vessels added to the uncertainty, pushing crude and product markets higher as participants reassessed near-term supply risk. The two-week ceasefire between the two sides is tenuous, due for expiry by Tuesday, with no word of extension. A first round of peace talks has, meanwhile, failed, with no assurance there will be another.

Rack prices moved sharply lower across all regions, reflecting a continued reset in physical markets after last week’s shift in sentiment.

ULSD racks witnessed the largest drops in PADD 3 and PADD 1. Gulf Coast ULSD fell 51.56cts to $3.4113 gallon, while East Coast prices dropped 37.13cts to $3.6037 gallon. Midwest values declined 32.41cts to $3.4169 gallon, while West Coast ULSD fell 36.46cts to $4.4328 gallon, maintaining the strongest regional premium. Rocky Mountain prices posted the smallest decline, down 19.65cts to $4.0102 gallon.

Relative to the national ULSD rack average of $3.6004 gallon, PADD 5 held the widest premium at 83.24cts above the U.S. benchmark, followed by PADD 4 at 40.98cts above. PADD 1 traded near parity, while PADD 2 and PADD 3 held discounts of 18.35cts and 18.91cts, respectively.

On conventional unleaded gasoline racks, all regions moved lower Monday. Gulf Coast gasoline recorded the largest decline, falling 15.80cts to $2.7992 gallon. East Coast prices dropped 14.52cts to $2.8798 gallon, while Midwest values declined 12.66cts to $2.6773 gallon. Rocky Mountain gasoline fell 10.93cts to $3.1123 gallon, while West Coast prices dropped 12.22cts to $3.8795 gallon, maintaining the only premium position.

Compared with the national gasoline average of $3.1835 gallon, PADD 5 remained the only region trading at a premium, at 69.60cts above the benchmark. All other regions held discounts, led by PADD 2 at 50.62cts below the national average, followed by PADD 3 at 38.43cts and PADD 1 at 30.37cts. PADD 4 traded just slightly below the national benchmark.

Premium gasoline rack prices also declined across all regions, broadly in line with conventional gasoline. West Coast premiums remained elevated at $4.2697 gallon, while other regions posted similar downward adjustments.

Physical markets appear to be lagging the move seen in futures, with rack prices still adjusting to last week’s correction even as geopolitical risk begins to build back into paper markets. Futures have responded quickly to renewed tensions, while rack values continue to reflect looser near-term buying interest and improved availability that developed during the recent pullback.

Even with the recent pressure, structure continues to point to a market that is not fully loose. RBOB backwardation has firmed back to around 7cts, while ULSD holds near 10cts on the front month, suggesting prompt supply remains relatively supported despite the broader decline in flat price levels.