Light end summary: Gasoline at 3-month high on supply disruptions
Quantum Commodity Intelligence - Gasoline cracks moved sharply higher this week as cash premiums for prompt barges soared on widespread disruption to regional output, while naphtha and propane both eased on poor feedstock demand.
Eurobob E5 oxy gasoline cracks to ICE Brent were heading towards $30/b by Thursday's close, up over a third from the end of last week.
Cash premiums for prompt Eurobob barges over swaps topped $200/mt for the first time on record, almost double the previous week, as disruptions to European supply escalated.
Industrial action has completely shuttered over half of France's refineries for over two weeks, while outages have compounded seasonal maintenance at Europe's two largest refineries – BP's 394,000 bpd Rotterdam and Shell's 400,000 bpd Pernis plant.
Agreements were reached between France's Total and two of three unions on Friday, but strikes are still ongoing.
Total is one of the biggest suppliers of Eurobob in the ARA barge market, and its absence has helped push premiums through the roof.
France has tapped strategic reserves and upped imports to alleviate domestic fuel shortages, but pumps are increasingly running dry and drivers are travelling across borders to find retail stations with fuel, tightening supply in neighbouring countries.
Regional gasoline stocks increased this week as blenders are likely to have increased the volume of components in tank, as blending activity has been hampered by lower output of unfinished gasoline.
Gasoline held in the ARA region edged up 0.6% to just under 1.3 million mt this week, according to consultancy Insights Global, the first build in a month.
US stocks moved the same way, up 1% from last week's 8-year low to 209.5 million barrels in the week to 7 October, according to the latest EIA data.
Much higher European values have squeezed the transatlantic arb this week, which appears closed on paper for the first time since September.
The RBOB-EBOB spread narrowed from last week's near-five-month high above $0.21/gal to below $0.17/gal in recent sessions.
The US has cleared most available cargoes out of Europe in recent weeks, compounding the impact of lower European supply.
Naphtha
A slowdown in gasoline blending added pressure to naphtha this week, with poor petrochemical demand compounded by cracker outages.
ARA stocks built around 13% to 326,000mt, with the east-west spread firmly closed at just $16/mt between Europe and Asia on front-month swaps.
Dow was heard to have shut down a steam cracker at its Ternezeun plant this week, although details were scarce.
Petrochemical demand has been poor for most of this year as soaring running costs crimp margins for manufacturers.
A slowdown in economic activity in China owing to its strict Covid policy has weighed on petchem demand in the regional manufacturing hubs of Asia.
Naphtha cracks were pulled down to a three-week low $18.53/b discount to ICE Brent on 11 October, from $14-15/b the previous week.
Propane
Poor petchem demand has also weighed on LPG as a feedstock, and propane is yet to see any boost from heating demand going into the winter.
Propane stocks are plentiful in the US and Europe, with storage filled ahead of time because of the energy crisis emanating from the war in Ukraine.
Propane cracks hit a 2.5-month low of -$51.37/b to ICE Brent on 10 October, down over $5/b from the previous week.