Europe oil/products: Gasoline cracks down, diesel and jet cracks soar higher

London (Quantum Commodity Intelliegence) - Gasoline prices failed to follow the rally in August Brent Tuesday in the wake of the first weekend of the US driving season, but diesel and jet surged ahead.

A wave of strong manufacturing data in Europe, the US and China swept stocks higher, while OPEC maintained its cautious approach to production increases outlined in May.

But Brent prices slumped just before the 1630 UK time close for product markets, which could have disrupted some of the correlations.

Diesel prices in Europe were buoyed by a very thin loading program from Primorsk in June, down 325,000 mt from May.

Jet prices have seen a summer bounce in demand.

The number of commercial flights in European airspace increased 6.5% last week, data from Eurocontrol showed, and airlines added an extra 2.5 million seats for sale in Europe last week.

Products

Naphtha prices in north Europe took their cur from Cif Japan prices where cracks ticked higher earlier in the day, which was later reciprocated in Europe. Both crack values versus front month Brent increased 32 cts/b.

Gasoline prices in Europe were generally only marginally higher, depressing cracks values. Before the US driving season officially started, the EIA noted that average US retail price for regular gasoline on May 24, the Monday before the Memorial Day weekend, was $3.02 per gallon (gal), $1.14/gal higher than in 2020, and 38 cents/gal higher than the 2015–19 average.

There were few jet bids or offers standing by the 1630 UK time close, with many of them withdrawn amid the slump in Brent, but the market was generally firmer, maintaining gains in nearby paper that were seen at the time of the Singapore close, amid some supportive data on flight numbers.

Distillate prices were strong. Diesel barges in ARA were trading at slight premiums to the fast rising front month Low Sulfur Gasoil futures contract. Primorsk diesel exports will fall 325,000 mt month-on-month in June, sources said.

Fuel oil prices are continuing to stage their own v-shaped recovery, with crack values surging again today, likely buoyed by the cemented consensus among OPEC+ group to keep a lid on adding sour supplies to the market, while global trade races sharply ahead.