US gasoline stocks hit a 12-year low as the 3-2-1 crack spread sets a record
US motor gasoline inventories dropped 1.7 million barrels to just above 204 million for the week ended September 25, the lowest since November 2014, per the EIA's weekly status report. The 3-2-1 crack spread hit an all-time high the same week. Refiners are earning more per barrel of crude turned into fuel than at any point on record, and jobbers are the ones paying for it at the rack.
Lean stocks heading into fall leave no cushion. Any refinery hiccup, or a cold snap that bumps demand, and the spread stays wide. Buyers should expect street prices to hold firm even if crude softens, because the gain is in the refining step right now.
Gulf flows return
Brent fell to $97.36, down from over $103 the day before. WTI is $89.57. The drop came after bank analysts and the tanker-tracking firm Kpler reported that oil flows out of the Persian Gulf have returned to roughly pre-war levels. More crude moving means the war premium is coming out of the price.
Crude could ease further if the strait stays open and Gulf barrels keep flowing. That helps refiner feedstock costs. With the crack spread where it is, though, do not count on the relief reaching the pump fast.
Diesel ban threat
Trump has proposed banning US diesel exports. Reuters reports Washington told France and Germany to release their own diesel stocks or face that ban. Keeping more diesel home could pull domestic distillate prices down. But Texas refineries that lean on export demand may cut runs if their overseas outlets close, and lower throughput tightens everything else, gasoline included.
China's export halt
China's refiners have halted fuel exports until further notice, with PetroChina canceling some October gasoline and jet cargoes, sources told Reuters. China pulled the same lever in spring and early summer. Fewer Chinese barrels on the water tightens the global fuel market and gives US export cargoes more room, which supports refiner margins that are already running hot.
Propane
US propane inventories climbed more than expected, with Gulf Coast stocks at a record high while exports fell sharply. Total stocks are 19% above the five-year average heading into the seasonal draw. Plenty of supply for heating season, so propane marketers are in a different spot than gasoline buyers this week.
What to watch
Whether the diesel export ban moves from proposal to policy is the big one. The longer China keeps exports shut, the tighter global fuel stays. And if crude keeps sliding while the crack spread holds, refiners keep the gain and the rack stays sticky.