European gasoline margin reverses course, fuel oil crack down 6%
London (Quantum Commodity Intelligence) - Refining margins for light ends in Europe firmed slightly after more than a week of consecutive daily losses, while distillate cracks surged and fuel oil cracks tumbled, both extending recent trends, according to Quantum data.
European gasoline cracks have been falling over the last week despite an expected uptick in demand from the US after the Colonial pipeline shutdown, but today made their first daily gain in 8 days, with the front-month (June) swap rising $0.17/b to $9.87/b.
Similar moves were seen in the first 8-9 months of the curve, all of which outpaced strengthening Brent crude oil futures, indicating at least a small shift in sentiment rather than simply moving higher in line with feedstock prices.
According to market sources, stocks of gasoline in the ARA trading hub have fallen in the last week after several cargoes were booked into the US.
Ultra-low-sulfur diesel barges FOB ARA cracks continued higher, June and July swaps gaining $0.24/b and $0.26/b on the day to $6.86/b and $7.45/b respectively, again outpacing moves on underlying Brent crude.
Jet also moved higher although gains were less pronounced relative to crude, June and July CIF NWE swaps rising $0.09/b and $0.14/b to $5.36/b and $6.1/b.
Distillates remained supported by expectations of travel restrictions easing in Europe as well as a rise in value during Asia trading as Indian refining rates slowed, even though demand was also hit hard by the worsening pandemic there.
On the fuel oil side, high-sulfur fuel CST 380 FOB ARA barges June/July swaps fell $0.66/b and $0.54/b to -$11.66/b and $11.18/b, marking a four-day losing streak.
Margins for shipping fuel have hit multi-month lows on both sides of the Suez, amid a shift to sour crudes and an uptick in refining run rates, which has seen fuel oils take a greater proportion of the barrel.
Marine fuel with max 0.5% sulfur had a mixed performance, with cracks at the front of the curve dipping but margins for the distillate/fuel oil blend improving from September onwards.
June and July marine fuel cracks fell $0.33b and $0.18/b on the day to -$0.07/b and +$0.52/b, while the Q4 crack rose $0.23/b to +$2.41/b.
