U.S. Gulf Coast finished gasoline and component prices fell to multi-year lows in late November as protests in Mexico, the region's top export destination, eroded exports just as refiners strove to draw down inventories to minimize year-end taxes.
Gulf Coast conventional 87 finished gasoline prices fell to $1.82/US just days before the Thanksgiving holiday, marking the lowest since 12 December 2023.
The Thanksgiving holiday typically signals higher gasoline demand as road travel increases. But demand waned during the week of Thanksgiving, and gasoline prices fell.
Mirroring declines in gasoline, regional values for alkylate blendstock reached the lowest in more than four years as sellers in the U.S. Gulf Coast and Atlantic Coast lowered bids to attract buyers.
Gulf Coast stocks of alkylate, reformate and naphthas for use in gasoline blending rose by 2pc to 30.5mn bl in the week ended 21 November, U.S. Energy Information Administration (EIA) data showed. This was up by 3pc on the year.
Price declines were mostly fueled by lower Gulf Coast blend values for high-octane gasoline components.
Slim exports compounded the decrease in finished gasoline prices, pressuring blending demand. Gulf Coast gasoline exports fell to 206,000 b/d in the week ended 21 November, the lowest since the week ended 1 August, when exports were last 124,000 b/d, according to Kpler data.
More than 80pc of Gulf Coast gasoline exports land in Mexico, but blockades by truck drivers and agricultural workers in Mexico over security concerns and agricultural policy disrupted the transport of fuel supplies on trucking routes in several states and in Mexico City. Though retailers in Mexico stocked up in advance, the protests have considerably constricted gasoline flows to Mexico from the Gulf Coast, leaving weekly exports down by 44pc compared with the same week last year.
Even with regional demand relatively low, finished gasoline inventories are up slightly on the year following a rebound in production earlier in the month. Gulf Coast gasoline stocks were up by 0.4pc from a year earlier in late November, EIA data show. But data for the same period show refinery utilization slipping to 92.3pc, down by 3.1 percentage points from the same week last year, as refiners began to pull back production before the end of the year to minimize inventory taxes.
With export flows restricted, Gulf coast refiners began to offer more gasoline in preparation for ad-valorem inventory taxes, which apply to assets held in storage at year-end.
Hannah Borai has been a market reporter for Argus Media since 2023, and she currently covers the US Gulf coast gasoline market on Argus Media’s US Products team in Houston.
Delaney Ramirez has reported on various commodity markets at Argus Media since 2021, and she currently covers US Gulf coast gasoline blendstocks on Argus' US Products team in Houston.
