Fasten your seatbelts: St. John puts the squeeze on...
Yesterday (Wednesday), spot Nymex gasoline for January delivery surged by 11.4 cents a gallon (+5.2%) on an apparent physical squeeze in the Northeast. The contract was lower past midnight EST, but as soon as it went positive (around 4am EST) the rally was on. A surge yesterday morning in the premium (+$0.07) of physical gasoline in New York Harbor to the futures contract generated suspicion of a squeeze in the market. As such, the rally was already on before traders in the U.S. arrived at their screens.
As detailed in today’s issue of The Schork Report , yesterday’s DOE report exacerbated the rally in gasoline, but it was not the cause of it… and, for the record, contrary to what some talking heads are spouting, yesterday’s ADP employment report had !@#$% NOTHING to do with a 5% spike in spot gasoline.
In this vein, yesterday the EIA reported a 0.94 MMbbl decline (-1.8%) in east coast (PADD I) supplies of gasoline. Supplies are now below the seasonal range relative to the norm since the start of the decade. More importantly, in the New England market area (PADD IA) stocks of 3.73 MMbbls are near the bottom of their respective range and in the central east coast, inclusive of the Nymex delivery hub in New York Harbor (PADD IB), stocks of 23.2 MMbbls are well below (?11%) normal.