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REFINERY MARGIN TRACKER: US margins soften as coronavirus cases rise and some states reimpose stricter lockdowns

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REFINERY MARGIN TRACKER: US margins soften as coronavirus cases rise and some states reimpose stricter lockdowns

Highlights

Texas puts back into place stricter restrictions to prevent coronavirus spread

The rise in US coronavirus cases could mean more lockdowns and lower gasoline demand

US refinery margins were mixed for the week ended June 26, as some states began to reimpose tighter lockdowns after a new surge in coronavirus cases resulted from a loosening of restrictions over the past few weeks, an S&P Global Platts analysis showed June 29.

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Some states began to lift regulations put into place in March and April, which helped propel gasoline demand higher.

Gasoline demand is slowly recovering from its April nadir, up to 8.6 million b/d for the week ended June 19, according to the most recent weekly US Energy Information Administration data.

On the US Atlantic Coast, cracking margins dipped slightly even as New York, New Jersey and Connecticut began gradual lifting of lockdowns and more cars took to the road.

The Bonny Light cracking margin dropped to $4.13/b for the week ended June 26, compared with the $5.01/b the week earlier, Platts Analytics Margins showed.

But USAC gasoline inventories well above the five -year average are keeping a lid on run rates and prices. USAC stocks are holding at a near-record high 75.4 million barrels for the week ended June 19, according to most recent weekly EIA data.

Fears of a resurgence of the coronavirus as more people leave their houses has refiners cautious how quickly inventories will draw and about raising refinery rates too fast. For the week ended June 19, refinery utilization for the US reached 74.5%, according to most recent EIA weekly data, compared with the 73.8% the week earlier.

Florida contagion fears grow

Restaurants have been one of the most impacted industries by the shutdowns. And so using their reopening can serve as one proxy to measure people's mobility post-quarantine.

As some states have allowed restaurants to reopen with restrictions as part of the moving back to a more normal economy, cases of coronavirus have risen.

Florida governor Ron DeSantis on May 4 began reopening beaches and parks and on June 1 allowed other businesses, including bars and restaurants, to reopen with restrictions.

According to data from Upserve, a point of service data provider used by restaurants to track their operations, their Florida customers showed a 35.37% drop in service year over year in June when bars reopened, compared with the 57.56% drop in May when bars were closed.

As restaurants reopened, Florida's confirmed cases of coronavirus jumped from 34,728 cumulative cases on May 1 to 132,545 cumulative cases on June 27, according to Johns Hopkins Coronavirus Resource Center, with 5,535 new cases reported in a one-day period between June 26 and June 27.

Texas reverses course

Upserve data for Texas shows a similar trend to Florida. June restaurant sales were down 57.52% from the year earlier, compared with May's 62.42% drop.

Texas Governor Greg Abbot, who let the state's stay-at-home order lapse on April 30, is now reversing his course for bars and restaurants, ordering on June 26 bars to close and restaurants to operate at 50% capacity.

According to data from Open Table, the restaurant reservation app, this had a definite effect on the number seated diners in Texas restaurants. This stood at 45.91% on June 28, compared with the 100% on June 21, which was Father's Day.

Refining margins on the US Gulf Coast also showed weakening for the week ending June 26. The cracking margin for WTI-MEH dropped to $5.51/b from the $6.01/b the week earlier, Platts Analytics data showed.

Total USGC gasoline stocks totaled 91.147 million barrels week ended June 26, well above the five-year average, most recent EIA data shows.

And refiners are expected to return more gasoline-making units to service this week, with 597,000 b/d offline for the week ended July 4, compared with the 702,000 b/d offline the week earlier, Platts Analytics data shows.

And according to Apple Mobility data, while US driving is back to 49% of where it was on January 13, 2020, their baseline for data measuring coronavirus mobility, Texas driving data is down.

Most recent driving data is 32% of the January baseline, down from 39% on June 26, the day the governor tightened restrictions, according to Apple Mobility.

US Atlantic Coast Refining Margin Averages ($/b)

Bonny Light Cracking

Arab Light Cracking

Bakken Crude Cracking

Forties Cracking

Week ending June 26

4.13

3.09

4.02

3.77

Week ending June 19

5.01

3.48

4.35

4.61

Q2 to date

2.95

4.61

1.60

3.18

Q2-19

6.87

4.94

13.48

6.74

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)

WTI MEH Cracking

Basrah Light Coking

LLS Cracking

Mars Coking

Week ending June 26

5.51

0.64

5.00

3.49

Week ending June 19

6.01

0.85

5.47

4.26

Q2 to date

4.20

-1.40

3.69

2.46

Q2-19

9.13

3.59

9.56

7.94

Q1-20

8.17

0.96

8.31

7.17

Q4-19

11.27

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 June 26

8.19

6.16

10.50

6.49

Week ending June 19

7.90

5.91

9.46

7.04

Q2 to date

3.31

2.99

3.53

2.46

Q2-19

17.73

16.60

17.42

17.63

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 June 26

8.55

11.53

9.89

9.52

Week ending June 19

10.13

13.54

11.62

13.10

Q2 to date

8.50

6.96

9.42

8.48

Q2-19

15.42

19.82

14.84

18.54

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

WTI MEH Cracking

Week ending June 26

-1.89

4.75

-1.92

0.45

Week ending June 19

-1.96

4.59

-1.73

-0.17

Q1 to date

-2.51

3.07

-3.39

-2.91

Q2-19

0.61

-1.10

0.46

1.84

Q1-20

-0.93

-3.86

0.09

1.58

Q4-19

-0.38

-2.45

1.02

3.56

Source: S&P Global Platts Analytics

ARA Refining Margin Averages ($/b)

WTI MEH Cracking

Bonny Light Cracking

Arab Light Cracking

Urals Cracking

Week ending June 26

1.36

2.43

3.34

-0.25

Week ending June 19

1.14

2.62

2.83

-0.17

Q2 to date

-1.34

1.19

4.91

0.55

Q2-19

7.10

6.10

4.75

6.28

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 June 26

-0.92

2.51

3.20

0.91

Week ending June 19

-0.83

2.55

2.98

0.80

Q2 to date

-1.28

3.08

2.99

-3.11

Q2-19

4.07

6.57

2.75

5.23

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