REFINERY MARGIN TRACKER: Margins rise as mobility increases on COVID-19 vaccine rollout

Refinery margins across the world trended higher for the week to Jan. 1 as the rollout of the COVID-19 vaccine imbued travelers with the holiday spirit, increasing the demand for gasoline, diesel and jet fuel, a Jan. 4 analysis by S&P Global Platts showed.

"Despite a holiday-related slowdown last week, US rush-hour congestion rose to 28% in Dec'20, up from 26% in Nov," wrote Matthew Blair, analyst with Tudor Pickering Holt, or TPH, in a Jan. 4 research note citing data from TomTom, an Amsterdam-based location technology specialist.

Blair said of the 40 cities tracked by TPH, 27 showed month-on-month increases, led by cities like New York, Chicago, Houston, Phoenix and Philadelphia. Increased congestions show greater levels of personal mobility, which has been stymied by people quarantining in a bid to prevent the spread of the coronavirus.

"The move puts US congestion just below [one-half] of last year's levels. Memphis congestion in Dec was 9/10 of last year, leading the pack. US congestion averaged 27% in Q4, up from 22% in Q3 and just 14% in Q2. These gains are likely to continue into 2021 as the COVID vaccine is distributed," he wrote.

US Gulf Coast cracking margins for WTI MEH averaged $7.54/b for the week to Jan. 1, compared with the $7.30/b the week earlier, according to margin data from S&P Global Platts Analytics.

The slight rise in the crude price -- supported by higher exports as well as domestic demand -- was more than matched by higher gasoline prices. For the week ended Jan. 1, WTI MEH rose 42 cents/b to average $49.64/b while CBOB averaged $1.36/gal, up 2.67/gal from the week earlier, according to Platts assessments.

Kpler commodity tracking data showed that crude exports from the USGC rose 171,000 b/d to reach 1.926 million b/d of crude for the week ending Jan. 1, including a tanker from Buckeye's newly-christened Corpus Christi South Texas Gateway Terminal heading to Shell's Tranmere Oil Terminal in the UK.

USGC gasoline exports dropped by 89,000 b/d to 100,000 b/d for that week ended Jan. 1, Kpler data showed, as stronger domestic demand combined with lower output to keep barrels at home. Platts Analytics forecast that 1.801 million b/d of USGC refinery capacity was offline for the week ended Jan. 1, which is expected to drop to 1.646 million b/d for the week ended Jan. 8.

Coking margins also rose, as more people are flying despite warnings from the US Centers for Disease Control and Prevention to stay home. The Transportation Security Administration screened 1.327 million travelers on Sunday, the highest daily number since Mar. 15, 2020, according to their website. This is despite over 21 million confirmed cases with US deaths from the coronavirus reaching 351,872 on Jan. 4, according to data from Johns Hopkins' Coronavirus Resource Center.

USGC coking margins for Mars averaged $5.91/b for the week ended Jan. 1, compared with the $5.53/b the week earlier. Higher margins were helped in part by increased ULSD exports, particularly to Mexico where exports averaged 132,000 b/d for the week ended Jan. 1, according to Kpler data. This compares with Pemex data showing Mexico's November ULSD imports averaging 110,000 b/d.

Asian, European margin rise

Margins in European and Asian oil hubs also trended higher last week as traffic metrics in these regions outpaced those of the US.

"Global rush-hour congestion climbed to 53% in Dec'20, just ahead of 52% in Nov. The overall gain came from big moves in Manila, Moscow, and Paris.," wrote TPH's Blair citing TomTom data.

Blair said while Chinese congestion dipped slightly in December, global congestion is approaching three-quarters of 2019 levels.

"Beijing, Moscow, and Shanghai are all above last year. Global congestion averaged 51% in Q4, up from 43% in Q3 and only 29% in Q2. We see additional gains coming in 2021," he said.

NWE cracking margins for Bonny Light averaged $2.68/b for the week ended Jan. 1, compared with the $5.62/b cracking margin on the US Atlantic Coast. However, stripping out the RINs cost on the USAC brings that margin closer to parity to its European counterpart at $2.73/b.

In the Mediterranean, margins also strengthened, with CPC Blend cracking margins averaging $4.25/b for the week ended Jan. 1 compared with the $3.69/b the week earlier.

South Asian margins are climbing out of negative territory, with Singapore Arab Light coking margins reaching 65 cents/b for the week ended Jan. 1 compared with the 27 cents/b the week earlier.