Outright prices for US Gulf Coast gasoline shot to a six-month high Monday, the last day of trading for Colonial Pipeline's 66th cycle.
Conventional gasoline was assessed at $1.5775/gal, its highest price since June 1, as a strong front-month futures contract combined with a cash price that climbed 8.25 cents/gal on the day.
The benchmark's cash differential was assessed at NYMEX January RBOB plus 2 cents/gal, the first time it held a premium to the futures contract since mid-October.
Scheduling day for Colonial often spurs a buying spree as traders look to secure barrels to meet their commitment and maintain shipper status on the perpetually full pipeline.
Market sources provided mixed reasons for the spike other than scheduling day, including a lack of offers in the spot market and traders looking to buy pipeline barrels after sending out gasoline cargoes.
Value for space on Colonial's Line 1, which typically has an inverse relationship to gasoline prices, fell 3 cents/gal to be assessed at plus 3 cents/gal, a one-month low.
Tulsa, Oklahoma, gasoline drew strength from the rise on the Gulf Coast, an ample source of Midwest gasoline, and found support from refiner buying.
Suboctane FOB Tulsa rose 1.25 cents to NYMEX January RBOB minus 11.75 cents/gal on the back of an unheeded Koch bid in the Market on Close assessment process.
BUTANE HITS TWO-YEAR HIGH
Normal butane on the Gulf Coast spiked 6 cents/gal Monday to a two-year high of 92.25 cents/gal, following the climb for conventional gasoline.
Non-LST normal butane, reflecting prices at the Enterprise storage and fractionation terminal in Mont Belvieu, Texas, was last higher at 97.50 cents/gal on November 26, 2014, when crude futures were trading at $73.69/b. In contrast, NYMEX January WTI settled at $51.79/b on Monday, putting normal butane at 75% of crude futures, up from an average of 67% in November.
Butane is commonly used for winter gasoline blending as environmental RVP regulations ease, allowing for more of the high-octane, high-RVP component into the blending pool.
One trader said "tight butane and [trader] positioning" were likely behind the strength in December barrels.
The December/January spread widened to 5.5 cents backward from 2.5 cents on Friday.
