Stepping on the gas: CPP prices up on floods, shortages
US gasoline prices are rising on the back of floods and fires, possibly supporting increased CPP imports as well. The premium on San Francisco gasoline prices over those in New York has increased since the shutdown of the Valero Energy Corp. 145,000 barrel-a-day refinery in the Bay Area (Bloomberg). The closure of the Houston Ship channel for three days has interrupted crude and CPP shipments, driving regional reformulated gasoline prices higher. And ethanol prices have headed higher due to deliveries of the biofuel being disrupted by Midwest flooding. A tightening gasoline market in the US appears to be increasing demand for CPP tonnage in the Atlantic (see chart). Gasoline stocks in the US have fallen for five consecutive weeks. A recovery in the MR tanker sector will likely drive up 1Y TC rates as well.