Light end summary: Gasoline at six-week low as exports fall
Quantum Commodity Intelligence - Gasoline cracks fell to their lowest level since the middle of January this week as export demand slowed, while naphtha moved the other way on tight regional supply.
Eurobob oxy E5 gasoline was assessed by Quantum around $11.50/b above ICE Brent crude Friday, down just under $2/b on the week, to its lowest since 10 January.
It comes as export demand – especially transatlantic – slowed after a hectic January.
RBOB-EBOB spreads are still wide on paper at around $0.35/gal this week, its highest for at least a year according to Quantum data, but export economics have been pressured by a sharp jump in freight rates.
Clean MR tanker rates between northwest Europe and the US east coast increased four-fold in the first week of sanctions on Russian supply, as the shipping market braces for a major disruption on the re-routing of over 1 million bpd of clean products from Russia.
However, having rebuilt steadily ahead of sanctions, stocks are plentiful on both sides of the Atlantic.
US gasoline inventories are near a one-year high 242 million barrels, as EIA data showed this week. Atlantic coast stocks – where most European exports end up – added 3 million barrels alone in the first full week of February to a 13-month high of 64.4 million barrels.
Gasoline held in the ARA region reached a six-month high 1.4 million tonnes this week as regional supply swells, around 20% higher than the same time last year.
Naphtha
Naphtha cracks were just shy of $2/b of ICE Brent crude Friday, from -$3.77/b a week ago, and within touching distance of 10-month highs at the start of February.
With naphtha prices holding up much better, the 'gas-nap' spread in northwest Europe is currently at its lowest in two months at around $13.50/b Friday, from $17.17/b a week earlier.
Gasoline blending remains the primary destination for naphtha, however, with petchem demand still subdued.
Crackers are still running at very low rates in Europe and Asia, largely as a result of poor economics.
But the loss of around 100,000 bpd of Russian naphtha due to sanctions has kept market supply relatively tight.
Shell has been active again in both European and Asian spot naphtha markets this week, which suggests they have not replaced term contracts for Russian barrels, at least in northwest Europe.
The company lifted two naphtha cargoes at the start of the week, taking Shell's total to six spot cargoes this month, but cash premiums have steadily softened from over $30/mt above M1 swaps at the start of February to under $13/mt this week.
That has coincided with widening backwardation on the naphtha forward curve, with M1-M2 timespreads at a one-month high $16/mt Friday, from $13.50/mt a week earlier.
