SNAP ANALYSIS: Draw in US gasoline stocks seen early in Europe and Asia
London (Quantum Commodity Intelligence) - The summer might still be saved for global gasoline refining margins after the US Energy Information Administration reported Wednesday the first draw down of stocks since the start of the US driving season at the end of May.
Spot and paper markets in Europe and Asia were anticipating this week's 2.9 million barrel stock draw, tracking New York RBOB gasoline's improvement against Brent.
In Singapore, spot FOB 92 RON gasoline cracks against Brent have gained almost a dollar over the week, rising from $4.90/b last Thursday to $5.95/b Wednesday, Quantum data shows.
Wednesday saw the biggest daily gain with the Singapore gasoline spot crack gaining $0.57/b.
In Europe, the spot crack for Eurobob E5 gasoline barges in ARA rose to $8.80/b versus Brent on Tuesday, up $0.90/b from last Thursday's value of $7.90/b.
Last week, Eurobob E5 barges traded as low as -$5/mt below July paper, but the discount disappeared on Monday, and the market started to trade flat to the front month paper and then at a small premium on Tuesday.
Before the Memorial Day holiday kickstarted the US driving season, US gasoline stocks were drifting lower, dropping from 236.2 million barrels on May 7 to 232.5 million barrels on May 21.
But as the driving season approached, US refiners cranked up production, and stocks gained for the next three weeks in a row to 243 million barrels, a counter-seasonal gain of 10.5 million barrels to push them above the 5-year average.
The crack for July RBOB versus Brent was trading above $21/b before May 15 but then slumped to under $19/b at times on May 17, and it was still under $20/b on Tuesday at the time of the Singapore close (0930 UK time).
Funds cut 6,000 long lots and added 2,150 short lots in RBOB futures and options on Nymex over the week to May 11.
But the market changed Tuesday.
The July RBOB cracks jumped above $21/b in Europe and were pegged at $21.50/b Wednesday morning before the release of the US weekly oil statistics.
However, the global gasoline market has turned only a small corner after a very long slide.
Cracks for spot Eurobob E5 spot barges were as high as $11.77/b in early May when the US Colonial pipeline shut down from a cyber-attack and have shed almost $3/b since then.
Similarly, cracks for spot 92 RON gasoline were as high as $7/b in early May and were still under $6/b Wednesday.
A small part of this week's rally in gasoline cracks may also reflect the surge in flat prices, with Brent now topping $75/b.
US crude stocks, down a hefty 7.6 million barrels last week, have dropped for five weeks in a row, and have fallen 34 million barrels since April 23.
