Gasoline Traders Are Paying One Another for Line Space Again
(Bloomberg) -- The rent is rising on America’s largest gasoline pipeline as traders send excess Gulf Coast supplies east.
Traders with gasoline to spare in the U.S. Gulf Coast have paid as much as 2 cents a gallon to get their barrels a ticket to the East Coast this week, according to Moataz Elmasry, quantitative oil trader at Castleton Commodities. Oil-market price reporting agency Argus Media Ltd. assessed the value as high as 3 cents last week. The price is on the uptick after refineries in Texas and Louisiana cut back their spring maintenance this year, softening fuel prices in the region.
“Line space has been negative until recently,” Elmasry said from London. “It’s now positive due to weakness in the Gulf Coast, which is driven by a reduction in refinery outages.”
Despite the recent enthusiasm to ship gasoline east, market intelligence service Genscape is reporting New York Harbor stockpiles sank by 1.1 million barrels last week, according to people familiar with the matter. The dip gave the front-month gasoline futures spread a jolt higher in morning trade on the New York Mercantile Exchange. Colonial declined to comment.
Colonial is the biggest single supplier of gasoline to the New York market, PBF Energy Chief Tom Nimbley said earlier this month in Houston.
“Rather interestingly and somewhat amazingly, in the last two years there’s been a number of times that Colonial Pipeline has gone slack,” he said in a speech at CERAWeek by IHS Markit. “It has consistently been over-nominated over history. It’s gone slack. Why? Because the trade flows on occasion change.”
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