Gasoline Crack Spread June 5,2025

Back on May 19, we suggested that the crack spread for RB versus WTI had peaked at over $28.
At that time, we made light of certain things that could cause the crack to weaken. We wrote :"The refiners are ramping up runs, coming out of maintenance. " This is clearly evident with this week's DOE data showing crude inputs to refineries rising by 670 MBPD to  16.998 MMBPD. This total input is very close to the level of crude that was going to refineries one year ago; the stats of 6/5/2024 showed runs of 17.144 MMBPD.

We also referenced gasoline demand in our May 19 assessment, writing : "What will need to be watched as well in the next few weeks is the gasoline demand, which normally rises over 9 MMBPD during driving season." The DOE data seen this week showed gasoline demand fell by 1.189 MMBPD to 8.263 MMBPD. This week's gasoline demand was well below that seen in 2023 (9.218 MMBPD) and 2024 (8.946 MMBPD). Yet, one analyst suggested : "Demand doesn't swing like that in gasoline".

The July gasoline crack versus WTI fell to a settlement price Wednesday of $22.58. The crack thus almost tested the support of $22.40 that we had pegged via the DC chart on May 19.
Technically, the crack looks oversold now, with the 50 cent rise in the crack spread's price today seeing momentum trying to turn positive. Resistance to the upside is seen at the $24 area, and then not until over $27.

The elements we see fundamentally that may support a rally are two-fold. Firstly, that gasoline demand will rebound from the very low level seen this week and rebound to near 9 MMBPD,  as is often seen during driving season. Secondly, there may be some curtailment of gasoline supplies in the near term due to the Canadian wildfires.  25 % of crude oil in U.S. refineries comes from Canada. Much of the crude oil in U.S. refineries in the Midwest and Rocky Mountains comes from Canada and is of a heavier crude grade. ”Nearly 70% of U.S. refining capacity runs most efficiently with heavier crude.”, as per American Fuel & Petrochemical Manufacturers commentary. (Independent) GasBuddy commentary adds : " if this hit to Canadian oil production continues for potentially more than a week or two, and/or if it worsens in terms of the amount of oil shut in, it could be a bit more problematic to these refineries." But, Gasbuddy adds that currently there has been no gasoline price impact.  ”