Gasoline futures on the NYMEX have soared after recent refinery problems. Jeff Mower, Editor-in-Chief, Oilgram Price Report, discusses the gasoline crack spread as well as supply disruptions and the recent increase in refinery problems.  Listen now... 

US gasoline inventories fell for the 12th straight week, according to the EIA, but RBOB futures fell instead of rising. It's a case of the news being just not bullish ENOUGH to keep the rally going.

Technically, RBOB was due for a fall. The doji Monday signalled a beearish reversal, so it would have taken a shockingly huge draw to turn that around. Also, the June crack had settled at nearly $30/barrel, so some profit-taking from traders long the crack spread from less than $15/b was in order.

Fundamentally, much of the draw came on the West Coast, which is largely an island unto itself. Also, production surged, although further glitches this week may cause output to drop back down in next week's report.

Heating oil is likely to be a bit of a drag on the complex. Distillate stocks are above average, especially in diesel, which is much more important than heating oil this time of year.

There is little in the report to signal a change in the overall bullish supply/demand situation. Demand cover fell to less than 21 days, and imports did not rise. European prices are strong, so it will take continued strength in the US to ensure a high flow of imports (beyond system/term barrels).

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