The Gasoline Crack-Why does RBOB Price off Brent

Ever since the WTI-Brent spread began to widen so has the price differential between RBOB (gasoline) and WTI? What is the key driver of this?

Why does RBOB in the US not closely follow WTI? It is because finished products are very similar and can be easily transported so traders will move RBOB generated from WTI in the US to Europe and the rest of the world?

I thought that commod prices were very regional specific? I just find it weird that RBOB and HO in the US are so closely connected to Brent which is allowing refiners to make ridiculously large margins.

 

Because IIRC, RBOB is priced at the New York gate rather than at Cushing. The problem with buying oil in Cushing, OK is that you have to get the oil or the refined product BACK to the Gulf of Mexico.

Rule #37 of finance: Geography trumps assets. And yes, those ~500 miles to the GoM are a lot longer than the 4000 miles via tanker from the UK to NYC/NJ when you don't have a pipeline system or other infrastructure for getting it back in place.

Rule #38 of finance: There are probably some job opportunities taking a car/trailer down to Cushing and carting oil back to Houston in 20 barrel trips.

 

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