Refinery margin tracker: Global gasoline cracks generally weaker despite constructive demand outlook

New York — Global refining margins for gasoline weakened across a majority of regions, with most Singapore margins anchored in negative territory and Northwest European margins sliding despite French refinery strikes limiting output, according to an analysis Tuesday from S&P Global Platts.

But some Asian refining margins strengthened slightly despite a slight growth in inventories. Last week, Singapore's onshore light inventories rose by 1.1 million barrels, to reach 13.13 million barrels, according to Enterprise Singapore, due in part to lower gasoline exports.

The Arab Medium cracking margins in China averaged minus $7.12/b for the week ended January 17, up from the minus $8.56/b the week earlier.

The Singapore cracking margin for Arab Medium averaged minus $6.32/b, compared with minus $7.41/b the week earlier. And Singapore cracking margins for WTI MEH rose to $2.16/b, compared with $6.07/b the week earlier.

In China, WTI MEH cracking margins also gained, averaging $1.66/b, up from the 80 cents/b the week earlier.

The gains came on the back of expectations of slower demand growth, with S&P Global Platts Analytics expecting an 85,000 b/d demand rise in the first quarter of 2020 compared with the 100,000 b/d growth set in Q4 2019.

Global gasoline demand is "constructive" and expected to grow by 75,000 b/d in January, according to Platts Analytics.

In the Western Hemisphere, expectations for an 80,000 b/d drop in US gasoline demand in January are balanced by 20,000 b/d growth in demand from Latin America and a 5,000 b/d growth in Mexican gasoline demand for the month, Platts Analytics forecasts show.

NWE, USAC MARGINS DRIFT LOWER

Cracking margins for Northwest European refiners are drifting down below the $1/b mark, despite expectations for a "marginal" increase in European demand for the month of January and constrained supply from French plants due to industrial action from unions.

The Bonny Light cracking margin for refiners in the Amsterdam-Rotterdam-Antwerp oil hub averaged $1.91/b the week ended January 17, down from the $2.42/b the week earlier.

The crude distillation unit at Total's 220,000 b/d Donges, France, refinery was to be restarted Friday. The plant was shut the previous Sunday after strikers blocked refinery access to the port of St Nazaire, cutting off access to crude supply.

French labor unions are protesting the government's pension reform, with more strikes planned for January 22-23, followed by a nationwide strike January 24. Despite the outages, Platts Analytics expects European exports to rise by 150,000 b/d in January 2020, compared with January 2019.

Gasoline exports to the US Atlantic Coast dropped off for the week ended January 10 to 316,000 b/d from the 391,000 b/d the week earlier, according to US Energy Information Administration data.

US Atlantic Coast cracking margins also weakened, as imports from Europe and the USGC fill in the supply gap left by the closure last summer of the region's largest refinery, the 335,000 b/d Philadelphia Energy Solutions plant.

USAC cracking margins for CPC blend averaged $5.71/b for the week ended January 17, compared with $5.85/b the week earlier, as regional gasoline stocks grew. Gasoline inventories in the central USAC averaged 34.96 million barrels for the week ended January 10, EIA data showed, above the five-year average of 33.15 million barrels.

USGC MARGINS TRACKING LOWER

On the US Gulf Coast, margins for both gasoline and distillate tracked mostly lower, due in part to an inability to export gasoline and diesel to South America. Persistent foggy weather closed the Houston Ship Channel on a daily basis, limiting exports of refined products and crude oil, shipping market sources said.

Shipping sources said fog will continue plague some USGC export ports this week, with Corpus Christi, Texas, expecting moderate fog Wednesday and Thursday and heavy fog over the weekend.

The port of Corpus Christi is among one of biggest exporters of crude oil from the USGC, and bad weather will cut back crude exports, stranding barrels and weakening prices.

Despite lower crude prices, USGC cracking margins for West Texas Intermediate priced at Magellan East Houston terminal fell to $7.41/b for the week ended January 17, down from the $8.25/b the week earlier, S&P Global Platts Analytics margins showed, as product prices fall more sharply than crude prices.

Unleaded 87 USGC gasoline averaged $1.64/gal for the week ended January 17, compared with the $1.68/gal the week earlier.

WTI MEH prices dropped to $61.96/b for the week ended January 17, compared with the $64.21/b the week earlier, Platts price assessments show.

USGC coking margins for Western Canada Select also softened, averaging $9.77/b for the week ended January 17, down from the $10.67/b the week earlier.

USGC ULSD export prices averaged $1.79/gal for the week ended January 17, compared with the $1.90/gal the week earlier, according to Platts price assessments.

USWC COKING, CRACKING MARGINS SLIP

On the US West Coast, coking margins for Napo averaged $12.87/b for the week ended January 17, down from the $14.67/b the week earlier. USWC cracking margins for Alaska North Slope averaged $12.14/b for the week ended January 17, compared with the $12.14/b the week earlier, Platts Analytics margin data.

PBF's 160,000 b/d Torrance, California, refinery reported to state regulators unplanned flaring at its plant last week, the third since the beginning of the year. Shell's 154,600 b/d Martinez refinery also experienced flaring as the plant is readied to be bought by PBF, with the closing date in the first quarter of 2020.