Medlo

Negative Gasoline Crack Spread Unsustainable

Keep in mind that Petrochemical demand in Asia is off a cliff, Naphtha is trading well below WTI, this will continue to weigh on gasoline. Also, natural gas is very inexpensive vs crude, so butane is cheap and during the winter, butane content in gasoline increases, also adding to the supply glut. Demand trends are down, the drop in prices will not reverse this in the US as people are finally waking up to the benefits of smaller efficient cars, realizing that money wated ina gas guzzler is better used for the kids education, food, etc. As long as distillate cracks are holding up, refiners will continue to run and one can easily see a prolonged negative gas crack. Also keep in mind many refiners run lower quality crude oil that trades at several dollars less than WTI.