As a heatwave sweeps across the northern US, temperatures aren’t the only thing heating up. In the Pacific Northwest this week, high temps are affecting refinery outputs, causing reduced supply and escalating prices. Temperatures have catapulted well above 100 degrees Fahrenheit, making it difficult for refiners to remove enough heat to run at maximum capacity. Local gasoline prices have propelled to 7-year highs, with gasoline basis jumping to more than 37 cents over NYMEX RBOB levels. Diesel prices have been more tame, trading just 11 cents of the NYMEX.
The timing couldn’t be worse; 47 million drivers are set to hit the road for this weekend’s holiday, according to AAA. Even without dangerous heat waves, fuel driver shortages put fuel supply at risk. Sources have reported bagged pump in various markets across the US, including pockets of Florida, Colorado, Ohio, Washington, and Oregon. In most cases, outages are sporadic, so drivers shouldn’t have trouble finding fuel for their travels. Still, the outages on what should be a busy weekend for retail stations shows how problematic the driver shortage has become across the US.
The API reported their weekly inventory data, which differed slightly from market expectations. According to the API data, crude stocks fell by a hefty 7.2 million barrels. On the product side, the API posted builds for both gasoline and diesel, while the market had expected a small draw from gasoline.