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REFINERY MARGIN TRACKER: USGC margins tick down as runs rise and exports slow

Highlights

USGC refiners operate at 74.3%: EIA

Gasoline and distillate exports slow

New York — US Gulf Coast refiners saw margins trend weaker last week as runs inched higher, crude prices rose and exports fell, an analysis from S&P Global Platts showed June 1.

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Gradual reopening of global economies from lockdowns put in place to prevent the spread of the coronavirus is lifting demand for gasoline and diesel, although any significant jet fuel demand increase is not expected until 2022, according to S&P Platts Global Analytics.

In the US, reopening is putting more drivers on the road and having a positive impact on gasoline.

"More mobility is driving up gasoline demand," said Kang Wu, head of Platts Analytics Asian Analytics, noting the US gasoline demand recovery curve is forming a V-shape from end-April's low point.

Despite an increase in US vehicle miles driven, USGC cracking margins fell last week. USGC cracking margins for WTI MEH averaged $1.44/b for the week ended May 29, down from $2.85/b the week earlier, according to Platts Analytics margin data.

Margins weakened as refinery utilization crept upwards, with USGC plants operating at 74.3% of capacity for the week ended May 22, 2 percentage points higher than the week earlier, Energy Information Administration data showed, despite the overhang of stocks built during April's lockdown period.

Diesel down with economy

US Gulf Coast coking margins saw a larger drop week-on-week, as diesel demand remains impacted by the economic slowdown caused by pandemic shut-ins of businesses and manufacturing facilities and the inclusion of jet into the distillate pool.

"Diesel is down with the economy and will come back with the economy," said Wu, speaking on the weekly coronavirus webinar held on May 28.

Platts Analytics forecasts an annual decline in US GDP between 4% and 4.5% as a result of coronavirus impact.

USGC coking margins for Mars fell to 56 cents/b for the week ended May 29, compared with $2.05/b the week earlier.

US distillate exports fell for the week ended May 22 to 885,000 b/d from 911,000 b/d the week earlier, EIA data showed.

This slowdown is mostly due to lower exports from the USGC to Latin America. Most distillates are exported from the USGC, where coronavirus re-openings are lagging some parts of the US. According to data from commodity tracker Kpler, USGC middle distillate exports to Latin America and the Caribbean went from 2.11 million barrels for the week ending May 22 to 32,000 barrels for the week ending May 29.

This fall-off in exports is reflected in the low price for export ULSD from the USGC, which averaged 90.3 cents/gal for the week ended May 29, Platts price assessments show.

However, those prices were underpinned by increased flows of middle distillates to Northwest Europe. Kpler data shows 1.06 million barrels went from the USGC to the north Europe oil hub of Amsterdam-Rotterdam-Antwerp for the week ending May 29, up considerably from the 34,000 barrels which was exported in the week ended May 22.

The increase in exports to Europe is due in part to the reopening of the continent as the coronavirus pandemic slows and mobility increases putting more diesel-powered cars back on the road.

"Europe and the US are on the same page of recovery," said Wu.

US Atlantic Coast Refining Margin Averages ($/b)

Bonny Light Cracking

Arab Light Cracking

Bakken Crude Cracking

Forties Cracking

Week ending May 29

1.42

1.36

-0.65

1.59

Week ending May 22

2.46

3.09

-0.91

2.08

Q2 to date

2.80

5.76

1.06

3.14

Q2-19

7.41

5.26

14.29

7.68

Q1-20

2.56

2.12

8.10

2.86

Q4-19

7.06

2.57

13.13

5.23

Source: S&P Global Platts Analytics

US Gulf Coast Refining Margin Averages ($/b)

Arab Light Cracking

Basrah Light Coking

LLS Cracking

Mars Coking

Week ending May 29

0.91

-1.35

1.18

0.56

Week ending May 22

2.35

0.18

1.85

2.05

Q2 to date

4.15

-1.77

3.65

2.39

Q2-19

5.00

3.87

9.99

8.32

Q1-20

3.05

0.96

8.31

7.17

Q4-19

3.78

3.65

10.99

9.30

Source: S&P Global Platts Analytics

US Midwest Refining Margin Averages ($/b)

Bakken Cracking

WTI Cushing Cracking

Syncrude Cracking

WCS ex-Cushing Coking

Week ending May 29

2.07

1.04

2.95

0.54

Week ending May 22

1.40

1.92

3.16

1.97

Q2 to date

1.79

2.37

1.80

1.24

Q2-19

18.66

16.98

17.65

17.23

Q1-20

9.27

6.79

7.53

8.02

Q4-19

12.32

11.19

12.04

12.21

Source: S&P Global Platts Analytics

US West Coast Refining Margin Averages ($/b)

ANS Cracking

Vasconia Coking

Arab Medium Coking

Napo Coking

Week ending May 29

9.73

14.56

11.08

14.19

Week ending May 22

11.18

14.20

11.16

13.99

Q2 to date

8.05

4.26

9.05

6.82

Q2-19

19.09

23.92

18.19

22.02

Q1-20

14.28

14.19

14.46

16.12

Q4-19

17.62

22.22

18.88

20.59

Source: S&P Global Platts Analytics

Singapore Refining Margin Averages ($/b)

Dubai Cracking

Arab Light Cracking

ESPO Cracking

Arab Light Coking

Week ending May 29

-3.03

4.73

-5.34

4.87

Week ending May 22

-2.48

5.17

-4.18

5.16

Q1 to date

-2.38

2.77

-3.52

2.58

Q2-19

0.76

-0.74

0.50

-0.86

Q1-20

-0.93

-3.86

0.09

-3.20

Q4-19

-0.38

-2.45

1.02

-0.32

Source: S&P Global Platts Analytics

ARA Refining Margin Averages ($/b)

WTI MEH Cracking

Bonny Light Cracking

Arab Light Cracking

Urals Cracking

Week ending May 29

-2.90

-0.01

7.12

-1.48

Week ending May 22

-2.60

0.32

7.43

-0.97

Q2 to date

-1.89

1.17

6.23

1.37

Q2-19

6.96

6.20

5.12

5.91

Q1-20

1.26

2.36

3.23

5.28

Q4-19

5.96

6.32

3.94

5.89

Source: S&P Global Platts Analytics

Italy Refining Margin Averages ($/b)

Urals Cracking

CPC Blend Cracking

Arab Light Cracking

WTI MEH Cracking

Week ending May 29

-2.90

1.00

6.17

-4.15

Week ending May 22

-1.98

2.01

7.00

-3.62

Q2 to date

-0.90

3.97

3.47

-4.23

Q2-19

3.89

6.51

3.34

5.28

Q1-20

4.40

6.00

1.92

0.03

Q4-19

3.76

7.13

2.17

4.39

Source: S&P Global Platts Analytics