US gasoline stocks fall to 204 million barrels, a 12-year low, as the 3-2-1 crack spread sets a record
US motor gasoline inventories dropped 1.7 million barrels in the week ended September 25, to just above 204 million barrels, the lowest since November 2014, per the EIA's Weekly Petroleum Status Report. The 3-2-1 crack spread hit an all-time high the same week. For anyone buying at the rack, that pairing means wholesale cost is climbing while the buffer that normally absorbs a supply disruption is thin.
Lean supply at the rack
The 3-2-1 crack is what a refiner makes turning three barrels of crude into two of gasoline and one of diesel. At a record, refiners are getting paid well to run, which usually pulls more product to market. Stocks this lean heading into October say product is leaving about as fast as it arrives.
For jobbers, thin stocks are where allocation starts. When a terminal runs short, unbranded pulls tighten first and branded suppliers lean on their contract customers. Rack differentials widen. None of that is a forecast; it's just how a short terminal behaves, and the inventory number says terminals have less room than they've had in over a decade.
China's export halt
China's refiners have halted fuel exports until further notice, multiple sources told Reuters on Thursday. PetroChina canceled some gasoline and jet fuel cargoes that were set to ship in October. China did the same thing in spring and early summer to protect its own domestic supply.
Why a US operator should care: less Chinese product on the water tightens the global pool that sets the marginal price, and jet pulled off the export market can back into the diesel complex. It won't hit your rack tomorrow. It does remove one source of extra supply at the same moment US gasoline stocks are at a 12-year low, which gives the market less slack if anything else goes wrong.
Propane iron
Fisk built a custom delivery truck for a propane marketer, per LP Gas Magazine. Small item, but a marketer spending on new equipment ahead of the heating season is one read on how operators expect the winter to run.
What to watch
Next Wednesday's EIA report, and whether gasoline stocks build back or keep drawing down from here. If China's halt runs into November, watch the diesel crack as unsold jet backs up into that pool. And watch your branded suppliers for allocation notices and wider rack differentials, which is where a 12-year inventory low shows up first for a jobber.