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U.S. gasoline margins rise to highest levels seasonally since 2012

NEW YORK - U.S. RBOB gasoline crack spreads rose to their highest levels seasonally since 2012 on Thursday on market concerns of refiners cutting runs due to weak demand for distillates amid mild winter forecasts. The RBOB crack <RB-CL1=R>,...

 

NEW YORK  - U.S. RBOB gasoline crack spreads rose to their highest levels seasonally since 2012 on Thursday on market concerns of refiners cutting runs due to weak demand for distillates amid mild winter forecasts.

The RBOB crack <RB-CL1=R>, an indicator of profit margins for refining crude into gasoline, rose $2.65 to as high as $17.22 per barrel on the New York Mercantile Exchange.

U.S. Energy Information Administration data on Wednesday showed distillate inventories, which include diesel and heating oil, rose 5 million barrels, the sharpest build since January while demand fell to its lowest level seasonally since 1998. Meanwhile, gasoline demand remained strong.

Traders said the latest data made people nervous that distillate may be in for a long slump amid mild winter weather and dumped their long positions, which were hedged against shorts in gasoline.

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The latest U.S. and European weather forecasts continued to call for warmer-than-normal temperatures through Christmas that would curb keep heating demand.

"The only way I can justify this is to assume that the market anticipates run cuts due to distillate oversupply and thinks the net effect would be intolerable to gasoline demand, which is only expected to grow," said Scott Shelton, broker and commodities specialist at ICAP in Durham, North Carolina.

"Basically, RBOB needs to carry the margin to ensure sufficient gasoline supply as prices down here certainly won't kill demand."

U.S. gasoline futures were up 3 percent to $1.27 a gallon by 10:40 a.m. (1540 GMT), outpacing U.S crude, which was down 0.5 percent.

U.S. heating oil futures continued its decline Thursday, dropping nearly 1 percent to its lowest since 2009.

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