EIA Roundup -- Gasoline supplies continue to tighten

Just when it seemed that concerns over gasoline supplies were fading, falling inventories and surging demand hint that prices may have fallen too far, too fast, leaving outright gasoline prices and crack spread values vulnerable to snapping back higher.

US gasoline inventories fell more than expected last week, according to the latest weekly data from the Energy Information Administration, as refinery glitches cut production levels and imports failed to take up the slack.

At the same time, relatively low pump prices encouraged drivers to hit the road, boosting demand. As a result, stocks fell by 3.6 million barrels to 192.56 million barrels, and are now more than 8.3 million barrels below the five-year average. That's the biggest deficit since mid-June, when NYMEX RBOB futures prices were more than 25 cents/gal higher.

Demand cover -- the number of days of total gasoline stocks available to cover current demand -- slipped to 20 days, nearly 1.5 days below 2006 and five-year average levels. Demand on a four-week moving average rose 0.5% year-over-year, according to the EIA.

The end of peak driving season is coming to a close, which should help to trim demand, and the higher RVP that is allowed in making winter-grade gasoline should allow cheaper components to be added into the mix. But look for crack spreads to widen past $10/barrel, and continue the rebound from July's collapse, until more imports make their way over from Europe.