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REFINERY MARGIN TRACKER: Stronger USAC margins supported by global refinery outages

Highlights

Knock-on impact raises USAC margins

European run cuts aid higher NWE, Mediterranean margins

US Atlantic Coast refinery margins for the week ended Oct. 15 rose on the back of higher global refinery margins, supported by increased refinery capacity offline despite the restart of some plants, an analysis from S&P Global Platts showed Oct. 19.

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Lack of regional refining capacity means the US Atlantic Coast needs to import a good portion of gasoline supply. This creates dependence outside sources, mostly pipeline flows from the US Gulf Coast and imported barrels from Europe, to meet the region's gasoline demand, making it very sensitive to global refining trends.

On the USAC, cracking margins have averaged $16.32/b so far in the fourth quarter for Nigeria's Bonny Light, S&P Global Platts Analytics margin data showed, the highest quarterly level since 1998 when Platts Analytics began calculating margins.

Higher USAC margins were aided by global outages for the week ended Oct. 15 which averaged around 13 million b/d, up 60,000 b/d from the week earlier, according to Platts Analytics data.

US refinery outages for the week ended Oct. 15 were pegged at 3.43 million b/d, or about 20% of US refining capacity, and this level is expected to hold steady in the week ended Oct. 22, Platts Analytics data showed.

Low stocks, inflow woes plague USAC

The most-recent US Energy Information Administration data shows total US gasoline inventories averaging 223.1 million barrels in the fourth quarter, the lowest level for the quarter since 2017. Platts Analytics calculates October gasoline demand at 9.09 million b/d and supply at 8.86 million b/d, leaving a shortfall of about 230,000 b/d, providing support for record US cracking margins in some regions.

Total USAC gasoline supply is averaging 28.9 million barrels so far in the fourth quarter, lower than the five-year average, EIA data shows.

And gasoline supply in the southern USAC states is particularly low, at 3.88 million barrels so far in the fourth quarter, EIA data shows, the lowest level for the quarter since 2013.

Supply there was constrained by pipeline repair which shut Kinder Morgan's SE pipeline, formerly known as the Plantation Pipeline, and then had a knock-on effect on Colonial Pipeline operations, forcing space allocations on the line.

European run cuts

Facing price spikes in the cost of natural gas to power their plants, some European refiners are forced to trim runs just enough to serve their local markets at the expense of gasoline exports to the USAC and other regions.

According to commodity tracking data from Kpler, so far only one 330,713 cargo of gasoline is making its way from Spain to New York for the week ended Oct. 22. This puts monthly European gasoline exports to the USAC at 3.17 million b/d so far in October, compared with the three-month average of 8.75 million b/d.

Cracking margins in the Mediterranean are also stronger, with cracking margins for CPC Blend averaging a record $10.43/b so far in the fourth quarter.

To the north, margins are also higher but more subdued, with Northwest European Forties cracking margins averaging $7.90/b for the quarter.

For both European hubs, Platts Analytics expects "total downtime including normal maintenance, idled units and discretionary run cuts decreased by 40,000 b/d to a level of 1.20 million b/d for the week ended Oct. 15."

However, for the week ended Oct. 22, Platts Analytics expects a larger decline of 190,000 b/d, which will also serve to support stronger margins.

US Atlantic Coast Refining Margin Averages ($/b)

Bonny Light Cracking

Arab Light Cracking

Bakken Crude Cracking

Forties Cracking

Week ending October 15

16.15

16.12

13.64

14.57

Week ending October 08

15.19

15.18

12.75

13.50

Q4 to date

15.61

15.55

13.10

13.97

Q4-20

4.16

3.79

3.60

4.28

Q3-21

13.59

11.76

11.17

12.28

Q2-21

11.70

9.66

10.17

10.58

Source: S&P Global Platts Analytics

US Gulf Coast Refining Margin Averages ($/b)

Arab Light Cracking

WTI MEH Cracking

LLS Cracking

Mars Coking

Week ending October 15

15.62

16.83

17.03

17.83

Week ending October 08

15.04

16.19

16.66

16.78

Q4 to date

15.23

16.42

16.78

17.19

Q4-20

3.47

6.10

5.53

4.32

Q3-21

12.30

14.56

14.13

14.35

Q2-21

10.15

13.09

11.76

11.49

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 October 15

16.70

16.26

16.73

18.79

Week ending October 08

18.53

18.22

18.31

19.55

Q4 to date

17.66

17.30

17.55

19.16

Q4-20

6.63

4.59

7.68

4.35

Q3-21

16.62

15.28

15.80

17.49

Q2-21

16.68

14.77

14.16

15.84

Source: S&P Global Platts Analytics

US West Coast Refining Margin Averages ($/b)

ANS Cracking

Vasconia Coking

Arab Medium Coking

Maya Coking

Week ending October 15

18.20

25.14

20.90

20.25

Week ending October 08

15.02

21.89

18.49

18.12

Q4 to date

16.59

23.46

19.67

19.21

Q4-20

10.16

11.56

9.67

12.22

Q3-21

17.25

24.83

19.48

20.25

Q2-21

16.88

22.12

18.10

18.88

Source: S&P Global Platts Analytics

Singapore Refining Margin Averages ($/b)

Dubai Cracking

Arab Light Cracking

ESPO Cracking

Arab Light Coking

Week ending October 15

4.34

3.32

5.22

3.85

Week ending October 08

3.73

2.64

4.16

3.02

Q1 to date

3.96

2.91

4.59

3.36

Q4-20

-1.07

-0.45

-1.14

-0.57

Q3-21

0.27

-1.61

2.29

-1.17

Q2-21

-1.14

-2.15

0.69

-1.90

Source: S&P Global Platts Analytics

ARA Refining Margin Averages ($/b)

WTI MEH Cracking

Bonny Light Cracking

Arab Light Cracking

Urals Cracking

Week ending October 15

8.64

10.92

7.99

10.43

Week ending October 08

8.73

10.33

7.61

9.68

Q4 to date

8.65

10.53

7.62

9.95

Q4-20

0.91

1.67

0.55

1.08

Q3-21

6.18

7.79

4.19

6.64

Q2-21

4.24

5.37

3.01

4.59

Source: S&P Global Platts Analytics

Italy Refining Margin Averages ($/b)

Urals Cracking

CPC Blend Cracking

Arab Light Cracking

WTI MEH Cracking

Week ending October 15

9.51

10.22

6.32

5.87

Week ending October 08

8.93

9.40

6.11

6.32

Q4 to date

9.16

9.74

6.07

6.11

Q4-20

1.31

2.98

-0.01

0.62

Q3-21

7.26

8.16

3.37

5.05

Q2-21

3.84

5.70

1.31

2.38

Source: S&P Global Platts Analytics