Highlights

  • December RBOB gasoline futures were near $2.6490 a gallon, close to their lowest since early March.
  • Gasoline earns about $23 a barrel over WTI while diesel commands roughly $90, leaving the 3-2-1 crack near $45.
  • Phillips 66 posted third-quarter net Earnings of $5.62 billion, with a record 41% distillate Yield and 98% utilisation.
  • HF Sinclair lifted its adjusted refinery gross Margin to $54.22 a barrel sold, up from $19.16 a year earlier.

Where is the money in refining right now? Not at the gasoline pump. December RBOB futures were indicated near $2.6490 a gallon at Wednesday's close, up about 4 cents but close to their lowest since early March and roughly 47 cents below where they stood in mid-October. Diesel commands a far richer premium to crude. For Phillips 66 (NYSE:PSX) and HF Sinclair (NYSE:DINO), the gap between the two products shapes how much of the refining windfall survives.

A Steady Decline

The slide has been gradual rather than sudden. The December contract traded at $2.7383 on the morning of 5 November, down from $3.1156 on 19 October, and New York Harbor spot RBOB was $2.76 a gallon at the 9 November close. On Tuesday the contract settled at $2.6088, down 4.21 cents, after dipping to $2.5720 intraday. Wednesday's gain followed crude higher after Iran signalled it would keep enriched nuclear material at home.

Gasoline Is the Weak Link in the Barrel

On late-Wednesday prices, RBOB was worth about $23 a barrel more than WTI, while ULSD commanded roughly $90, and the combined 3-2-1 crack, a rough proxy for US refining margins, stood near $45. Refiners are therefore earning most of their windfall on diesel and jet fuel, a reflection of lost Middle Eastern and Russian product exports rather than any comparable gasoline shortage.

Specification changes reinforce the pattern. Autumn and winter gasoline grades allow higher vapour pressure, which lets refiners blend in more cheap butane and generally lowers production costs, a shift that tends to weigh on gasoline cracks into year-end.

Tight Supply, Softer Demand

Gasoline is not abundant. US supplies remain below seasonal norms, and refiners shifting yields towards middle distillates, plus autumn maintenance, could constrain output further. Yet Demand is responding to price: lower winter driving has helped inventories recover, and US pump prices fell below $4 a gallon for the first time since July. The EIA's November outlook forecasts retail gasoline averaging $3.89 a gallon in 2026 and $3.73 in 2027, the latter about 5% above its previous forecast.

Cheaper crude, the largest input cost, can support gasoline margins even if pump prices fall, after Brent and WTI slid in November on hopes of US–Iran de-escalation.

US Refiners: Diesel-Led Earnings, Gasoline Drag

Phillips 66 realised a record refining margin of $38 a barrel in the third quarter. Its record distillate yield shows how refiners are tilting output towards the more profitable product.

HF Sinclair runs refineries in the US mid-continent and Rocky Mountain regions and sells branded fuel, with branded fuel sales climbing to 420 million gallons. Inland refiners often price products off regional benchmarks rather than New York Harbor RBOB, so their margins can diverge from the NYMEX crack. A retail network also gives some protection: when wholesale gasoline falls faster than pump prices, Marketing margins can widen, though that cushion shrinks when wholesale prices rise.

Marathon Petroleum produced 1.52 million barrels a day of gasoline in the third quarter, more than its 1.21 million of distillates, so a weak RBOB crack weighs more on its blended margin than the headline diesel crack suggests, even though its refining and marketing margin still reached $45.70 a barrel.

Integrated and Import-Exposed Models

Suncor combines oil sands output with refining and the Petro-Canada retail network, and reported record third-quarter refined product sales of 676,900 barrels a day at 95% utilisation. In Australia, Viva Energy's Geelong refining margin was US$21.40 a barrel in the September quarter, though an April fire damaged its alkylation unit, which makes a high-octane gasoline blending component, and it will stay offline through next year.

What to Watch Next

The EIA's weekly report, delayed to noon ET on Thursday 12 November, will show whether gasoline stocks are still rebuilding. Beyond that, watch Iran talks and Hormuz shipping, US retail price surveys, refinery restarts after maintenance and the December contract's expiry at the end of November, when quotes roll to the winter-grade January contract.