New York — US refining margins trended higher last week, pulled up by refinery outages and lower gasoline stocks on the cusp of the summer driving season, an analysis by S&P Global Platts showed Monday.
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In its most recent Summer Fuels Outlook, the EIA forecasts the US to be a net exporter of about 90,000 b/d of gasoline during the 2019 summer driving season. If this materializes as predicted, it would be the first time the US was a net gasoline exporter for a whole summer since 1960, the agency said.
However, most recent EIA weekly data showed gasoline imports rose on planned and unplanned refinery outages, reaching 990,000 b/d for the week ended April 12, from the week earlier 714,000 b/d, as coastal refiners increased imports due to planned and unplanned refinery downtime.
Gasoline imports are expected to rise before they fall. S&P Global Platts Analytics expects EIA weekly data to show 1.097 million b/d of gasoline imports in the week ended April 19, as refiners begin to bring back online units following planned and unplanned work.
Meanwhile, EIA data showed gasoline exports dropped to 599,000 b/d from 656,000 b/d for the week ended April 12.
USCG MARGINS SUPPORT STRONG EXPORT MARKET
US Gulf Coast ports ship out over 90% of all gasoline sent from the US, and USGC refiners will continue to reap the profit from running domestic light, sweet crudes from the Permian and Mid-Continent and shipping it out to Mexico and other Latin American countries as gasoline and distillates.
USGC cracking margins for West Texas Intermediate averaged $13.55/b for the week ended April 19, slightly below $13.67/b the week earlier, but still up from the $3.75/b cracking margin from running Iraq's Basrah Light.
Platts margin data reflects the difference between a crude's netback and its spot price. Netbacks are based on crude yields, which are calculated by applying Platts product price assessments to yield formulas designed by Turner, Mason & Co.
The EIA also forecasts higher summer gasoline supply will offset increased consumption and lower net imports. EIA sees US summer gasoline demand up 30,000 b/d while refinery and blending supply will rise 80,000 b/d year on year. Imports are forecast to fall by 90,000 b/d for the summer.
However, gasoline imports into the USGC almost doubled for the week ended April 12 to 217,000 b/d from the 124,000 b/d the week earlier as US Gulf Coast refiners are working to complete heavy turnarounds at their plants ahead of IMO 2020, EIA data showed.
On January 1, 2020, the International Maritime Organization mandate that bunker fuel sulfur levels drop to 0.5% from the current 3.5% take effect and refiners want to be ready to take advantage of the stronger margins expected from the shift.
USGC refinery utilization is expected to rise and imports dwindle as planned work is completed. Platts Analytics forecasts that USGC fluid catalytic cracking capacity offline will fall to 530,000 b/d the week ending April 26, from the 667,000 b/d offline the week earlier.
HEALTHY USAC HIBERNIA MARGINS
On the US Atlantic Coast, ongoing heavy turnaround programs are expected keep 555,000 b/d of crude capacity offline for the week ended April 26, according to Platts Analytics.
This works out to about 45% of USAC's 1.224 million b/d of refining capacity, and has underpinned and supported a rise in cracking margins and increased gasoline imports to 689,000 b/d for the week ended April 12. Regional gasoline imports for the week earlier totaled 573,000 b/d.
Imports of Eastern Canada's Hibernia crude into the USAC totaled 1.963 million barrels from April 11 through April 17, according to US Customs data. The crude's cracking margin gained a penny week-on-week to average $12.04/b the week ended April 19, Platts margin data showed.
Phillips 66 increased imports of Hibernian crude following the successful restart of the gasoline-making fluid catalytic cracking unit at its 258,000 b/d Bayway refinery in Linden, New Jersey. And PBF imported 674,843 barrels during this period into its 160,000 b/d Paulsboro refinery, US Customs data showed.
USWC REFINERY OUTAGES
The EIA also forecasts lower retail gasoline prices for the summer 2019 driving season, ranging from a low of $2.51/gal on the USGC and a high of $3.27/b on the US West Coast.
Some USWC refiners have benefited from unplanned outages at several California refineries, which have pushed up regional cracking margins there. USWC Basrah Light cracking margins averaged $17.58/b the week ended April 19.
This is flat from the week earlier margins when California reported a 12.4% drop on CARB gasoline production due to a 6.7% drop in refinery utilization, according to the California Energy Commission.
However, output is expected to rise this week, tempering margins. Platts Analytics expects fluid catalytic cracking capacity offline to rise to 530,000 b/d for the week ended April 26, from the 667,000 b/d the week earlier.
|US Gulf Coast Refining Margin Averages ($/B)|
|Bakken cracking||Bonny Light cracking||Arab Light cracking||Hibernia cracking|
|Week ending Apr 19||15.15||12.25||7.19||12.04|
|Week ending Apr 12||14.02||12.28||6.81||12.03|
|Q2 to date||13.66||12.1||6.36||11.77|
|US Atlantic Coast Refining Margin Averages ($/B)|
|LLS cracking||Mars coking||Maya coking||WCS coking|
|Week ending Apr 19||10.84||9.25||10.47||12.21|
|Week ending Apr 12||11.57||9.16||9.17||11|
|Q2 to date||11.11||8.65||8.93||10.93|
|US Midwest Refining Margin Averages ($/B)|
|Bakken cracking||WTI cracking||WTS coking||WCS coking|
|Week ending Apr 19||18.71||15.89||21.17||20.46|
|Week ending Apr 12||17.96||15.8||18.37||18.98|
|Q2 to date||17.56||15.6||17.97||18.96|
|US West Coast Refining Margin Averages ($/B)|
|ANS cracking||Mixed Light Swt cracking||Escalante coking||Oriente coking|
|Week ending Apr 19||19.62||34.05||20.13||23|
|Week ending Apr 12||21.09||30.54||22.11||24.3|
|Q2 to date||19.43||30.47||20.11||22.1|
|Singapore Refining Margin Averages ($/B)|
|Arab Heavy cracking||Arab Medium cracking||Dubai cracking||Qatar Land cracking|
|Week ending Apr 19||1.25||0.31||4.46||3.95|
|Week ending Apr 12||1.67||0.67||4.73||4.18|
|Q2 to date||1.45||0.43||4.38||3.87|
|ARA Refining Margin Averages ($/B)|
|Arab Light cracking||Brent cracking||Houston light sweet crack||Urals cracking|
|Week ending Apr 19||6.17||6.09||6.75||6.15|
|Week ending Apr 12||6.36||5.68||6.66||5.67|
|Q2 to date||6.4||5.89||6.83||5.83|
|Italy Refining Margin Averages ($/B)|
|Urals cracking||Azeri Light cracking||CPC Blend cracking||Houston light sweet cracking|
|Week ending Apr 19||5.7||5.4||5.45||4.97|
|Week ending Apr 12||5.48||5.72||5.7||5|
|Q2 to date||5.41||5.72||5.67||4.85|
Source: S&P Global Platts; Turner, Mason & Co.
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-- Edited by Derek Sands, firstname.lastname@example.org
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