Until the RFG supply deficit is closed, the cash market will remain quite sensitive to any reports of refinery problems, particularly from the RFG producing refiners. Following a brief respite last week, refinery snags are back in the news and could support the June unleaded prices further, both absolutely and in relation to the rest of the complex. Meanwhile, the spot trade for future's grade product at New York Harbor remains well bid with prompt premiums holding above 9 cents, and with end of May cash premiums stretching out to more than 7 cents. These unusually large premiums could drive June futures to a test of last month's May contract highs in the 1.16 area. I have enclosed a copy of the New York trade as I wrote this letter.
Price always is reflected in demand and prompt availability.
The crude market appears poised to finish the week on a strong note with help from a gasoline market that refuses to die. This week's broad- based market developments, such as the reduction in the discount rate and the Bush administration's announced energy plan, didn't appear to have significant price impact. However, underlying demand for barrels for nearby delivery is still being driven by a strong underlying demand, as refineries continue to crank up activity amidst unusually attractive refinery margins. Statements out of various OPEC nations have been unusually low key in recent days following Vice President Cheney's conciliatory gestures toward the cartel. However, it should be kept in mind that the higher the prices leading up to the meeting, the greater the odds for at least some production increase.