It's always been said that California is a little different. No doubt about that this week.
In a market where prices are plunging worldwide, California gasoline prices are managing to soar. On Friday alone, the spread between the NYMEX RBOB price and the price of CARBOB, which is the basic building block for making finished California gasoline, has soared 21.5 cts/gal from where it was yesterday. This afternoon, it rose from 16.5 to 21.5 cts in a matter of less than an hour. The spread against NYMEX has reached 72 cts.
A series of refinery mishaps at various plants in California created this craziness. The spreads between current delivery and further out deliver are in steep backwardation, with the current price higher than prompt prices, a sure sign of tight supplies. One broker told Platts' Lisa Street: "Refiners are in both selling and buying. The traders just don't have the juice."
It's another reminder that though oil is a highly interrelated market, occasionally a lamb wanders away from the flock. But markets react, and ultimately, it returns to its fellow sheep.
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