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Gasoline Prices Could Continue to Outperform Oil Prices

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Gasoline prices could outperform

The shutdown at Philadelphia Energy Solutions could increase US oil inventories in the coming weeks. But at the same time, gasoline inventories might decline. The Philadelphia Energy Solutions refinery has a refining capacity of 335,000 barrels per day. On June 26, the United States Gasoline Fund LP (UGA), which follows gasoline prices, rose 4%. Moreover, UGA outperformed the United States Oil Fund LP (USO), which tracks US crude oil futures by ~1.6 percentage points.

Oil inventories

On June 26, US crude oil July futures rose 2.7%. On the same day, the EIA reported a fall of 12.8 MMbbls (million barrels) in oil inventories for the week ended June 21 compared to a Reuters poll for a fall of 2.80 MMbbls. Moreover, gasoline inventories fell one MMbbl compared to a Reuters poll for a rise of 0.288 MMbbls.

Downstream stocks

After the fire at Philadelphia Energy Solutions on June 21, downstream stock PBF Energy (PBF) has risen 16.7% since June 20. PBF Energy is set to benefit from the shutdown of the Philadelphia Energy Solutions refinery. Moreover, stronger gasoline prices should benefit other refinery stocks such as Phillips 66 (PSX) and Valero Energy (VLO). US downstream stocks account for 27.7% of CRAK. CRAK has risen ~1.2% since June 20.

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