Chicago RBOB prices highest since November

Chicago RBOB gasoline has risen to the highest outright price in more than eight months, possibly on lower pipeline flows from the US Gulf coast.

Chicago's West Shore/Badger RBOB traded on Friday at a 30¢/USG premium to the September RBOB Nymex futures contract, buoying prices by 6.02¢/USG to $3.26/USG, the highest since 2 November.

Chicago RBOB also rose against CBOB, reaching a 48.25¢/USG premium on Friday, the widest spread between the two grades since 9 June.

Chicago RBOB for the third August trading cycle was assessed Friday at a 7.50¢/USG discount to the second cycle, a steep backwardation that indicates traders are willing to pay a premium for prompt delivery.

Prices may have climbed as lower receipts from the US Gulf coast along the Explorer pipeline possibly depressed the amount of product available in Chicago, according to market participants. Shippers could be hesitant to send product to the US midcontinent as risks from potential pipeline delays grow as the end of summer driving season draws nearer. The market is set to transition from the summer formulation of 7.40 Reid vapor pressure (RVP) to 11.50 RVP in mid-September.

Gasoline pipeline flows from the US Gulf coast to the US midcontinent typically decrease from July to August. CBOB receipts between the two regions over the past five years fell from July to August by an average 243,000 bl, according to Energy Information Administration (EIA) data.

US midcontinent RBOB inventories rose to 5.16mn bl in the week ended 4 August, up by 3.2pc from the prior week, according to EIA data. US midcontinent CBOB inventories fell in the same period, dropping by 1.7pc to at 30.2mn bl.

By Zach Appel