Light Ends Summary: Gasoline recovery continues on tight supply
Quantum Commodity Intelligence – Gasoline and naphtha ticked higher in the final week of September, consolidating gains over the month, as industrial action and autumn maintenance helps tighten supply, and export interest was heard firmer.
Gasoline cracks touched fresh five-week highs of $12.75/b this week, up from an average $10.88/b the previous week, and just $2.43/b at the start of September.
Gasoline has recovered from lows at the start of the month as excess supply built up in late summer winds down.
ARA gasoline stocks are at their lowest since the start of July, falling for the third straight week to just under 1.3 million tonnes as of 29 September, according to data from Insights Global.
Industrial action in France has compounded what is likely to be a heavy autumn maintenance season.
Strikes have completely shuttered two of France's largest refineries, at Total's 240,000 bpd Gronfevrille plant and Exxon's 240,000 bpd Port Jerome refinery, in addition to large-scale walkouts at Feyzin and Donges.
It comes at the start of what could be a tight autumn maintenance season.
Around 1.5 million bpd of European refining capacity is expected offline in October, according to consultancy Energy Aspects, around 15% of Europe's refining throughput in August.
That is up from an average 1.1 million bpd of offline capacity in previous autumn maintenance periods, before Covid between 2015-2019, the consultancy said.
Exports were also higher, with the US pulling cargoes again.
The M2 RBOB-EBOB transatlantic arbitrage touched $0.20/gal again, matching last week's four-month high.
Hurricane Ian offered little support to European exporters on the westbound route in the end, making landfall in Florida and passing the country's refining hub in the US Gulf.
It could ultimately prove to be a drag on demand, following significant damage to the state in recent days.
US gasoline demand reached a six-week high 8.8 million bpd in the week to 23 September, according to the latest EIA data, which helped push US inventories to an 11-month low.
Naphtha
Gasoline blending helped pull naphtha stocks down by a third to 288,000mt, a four-month low.
The winter gasoline season is now fully underway, with benchmark Eurobob assessments fully transitioning to the lower-premium grade by 28 September.
Blenders have reported an uptick in activity, while regional petrochemical demand remains in a lull.
Exporters are still yet to see much of a boost from a wide east-west spread, with heavily discounted Russian cargoes finding a home in Asia, where petchem demand has improved.
Naphtha cracks reached two-month highs around $17/b below ICE Brent this week, from -$20/b a week ago.
Propane
Propane was edged lower on the week, hitting a two-week low -$43/b to ICE Brent on 29 September.
Regional petrochemical demand remains subdued, with European crackers likely to stay uncompetitive through the winter on soaring costs.
