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REFINERY MARGIN TRACKER: US refining margins inch up ahead of Thanksgiving holiday travel

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REFINERY MARGIN TRACKER: US refining margins inch up ahead of Thanksgiving holiday travel

Highlights

Margins rise despite less Thanksgiving driving

Jet travel reaches highest level since March

New York — US refining margins ticked higher last week despite anemic demand by Thanksgiving drivers who chose to forego the traditional road trip, putting a crimp in gasoline demand that has been rising as coronavirus lockdowns ease, an analysis from S&P Global Platts showed Nov. 30.

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"Travel by private car—generally regarded as one of the safest and most available means of leisure travel during the pandemic—had begun establishing itself as a leading indicator of travel's rebound," said Cree Lawson, CEO of travel data company Arrivalist, in a statement. "That appears to have taken a back seat to people's desire to protect themselves and each other from a surge of COVID-19 cases."

While overall US road travel for the Thanksgiving holiday was down 35% from last year, over the last 30 days road travel is down only 20.8% compared with last year, according to Arrivalist's Daily Travel Index.

Regional differences drive margins

Arrivalist said road trip activity varied greatly by state over the holiday, noting virtually all of the Northeastern states saw less than half of the road activity of the prior year, while states in the western half of the country saw smaller drops travel, with Utah travel down the least at 13%.

US Atlantic Coast cracking margins for Bonny Light rose 51 cents/b to average $3.48/b for the week ended Nov. 27, according to S&P Global Platts Analytics margin data. In New Jersey, Arrivalist data shows Thanksgiving holiday driving down 39% from last year, but over the past 30 days driving is down only 20.8%.

In the US Midwest, margins also gained despite lower Thanksgiving road travel, with Bakken cracking margins averaging $5.58/b for the week ended Nov. 27, up from the week earlier's $5.40/b.

Illinois saw a 46.2% decline in road travel over the past seven days, compared with the 29.2% year-over-year drop off.

In California, Thanksgiving travel fell off by 26.2% from last year, while over the last 30 days road travel is down only 14.2% from last year. Cracking margins for regional benchmark Alaska North Slope averaged $11.63/b for the week ended Nov. 27, compared with the $9.20/b the week earlier.

USGC benefits from higher holiday jet demand

While road travel numbers remained desultory, pent-up demand for air travel, cheap tickets and airline precautions to prevent the spread of the coronavirus helped increase the number of people flying over the holiday.

More air travel helped increase jet fuel demand. According to Transportation Security Administration checkpoint data, the number of people flying for the holiday weekend reached levels not seen since early March, averaging over 1 million per day starting Nov. 20, the day before the Thanksgiving holiday, and again on Sunday, Nov. 29.

On the US Gulf Coast, RIN-adjusted jet prices, which in October and early November held a premium to ULSD as airlines purchased fuel for holiday travelers, flipped back to a discount. For the week ended Nov. 27, RIN-adjusted jet prices were trading at 1.08 cent/gal discount to ULSD compared with the 46-point premium seen for the week ended Nov. 13.

Stronger jet demand and colder weather pushed coking margins higher. USGC coking margins for Mars averaged $4.65/b for the week ended Nov. 27, up from the $3.79/b the week earlier.

Cracking margins also showed a stronger trend on the back of rising gasoline demand nationwide. WTI MEH cracking margins averaged $6.36/b for the week ended Nov. 27 compared with $5.52/b the week earlier.

US Atlantic Coast Refining Margin Averages ($/b)
Bonny Light Cracking
Arab Light Cracking
Bakken Crude Cracking
Forties Cracking
Week ending Nov. 27
3.48
4.33
3.44
4.18
Week ending Nov. 20
2.97
3.26
2.13
3.6
Q4 to date
4.2
3.56
2.94
4.69
Q4-19
6.89
2.14
12.89
4.98
Q3-20
3.63
1.84
3.62
3.59
Q2-20
2.92
4.46
1.66
3.13
Source: S&P Global Platts Analytics
US Gulf Coast Refining Margin Averages ($/b)
WTI MEH Cracking
Arab Light Cracking
Mars Coking
Maya Coking
Week ending Nov. 27
6.36
3.91
4.65
4.4
Week ending Nov. 20
5.52
2.92
3.79
4.29
Q4 to date
5.72
3.11
4.03
4.87
Q4-19
10.98
3.3
8.94
9.95
Q3-20
5.09
1.51
2.84
3.61
Q2-20
4.16
3.2
2.4
6.03
Source: S&P Global Platts Analytics
US Midwest Refining Margin Averages ($/b)
Bakken Cracking
WTI Cushing Cracking
Syncrude Cracking
WCS ex-Cushing Coking
Week ending Nov. 27
5.58
3.56
6.8
2.98
Week ending Nov. 20
5.4
3.38
6.84
3.13
Q4 to date
6.13
4.45
7.25
4.47
Q4-19
11.8
10.67
11.59
11.75
Q3-20
5.65
4.24
5.6
4.18
Q2-20
3.54
3.13
3.86
2.65
Source: S&P Global Platts Analytics
US West Coast Refining Margin Averages ($/b)
ANS Cracking
Vasconia Coking
Arab Medium Coking
Napo Coking
Week ending Nov. 27
11.69
13.53
11.83
10.42
Week ending Nov. 20
9.2
10.6
9.09
8.29
Q4 to date
10.4
11.94
9.63
10.16
Q4-19
16.07
20.61
17.33
19.16
Q3-20
9.67
11
7.91
9.63
Q2-20
8.39
7.04
9.3
8.42
Source: S&P Global Platts Analytics
Singapore Refining Margin Averages ($/b)
Dubai Cracking
Arab Light Cracking
ESPO Cracking
Arab Light Coking
Week ending Nov. 27
-1.31
-0.98
-1.87
-1.3
Week ending Nov. 20
-1.2
-0.79
-1.6
-1.24
Q1 to date
-1.04
-0.48
-1.09
-0.7
Q4-19
-0.7
-2.78
0.82
-0.55
Q3-20
-2.06
-2.27
-1.24
-2.62
Q2-20
-2.51
3.13
-3.35
2.98
Source: S&P Global Platts Analytics
ARA Refining Margin Averages ($/b)
WTI MEH Cracking
Bonny Light Cracking
Arab Light Cracking
Urals Cracking
Week ending Nov. 27
-0.13
0.28
-0.44
-0.2
Week ending Nov. 20
-0.13
0.39
-0.19
-0.14
Q4 to date
0.94
1.72
0.67
0.75
Q4-19
5.63
6.11
3.62
5.54
Q3-20
0.4
1.68
-0.9
0.51
Q2-20
-1.28
1.19
4.8
0.46
Source: S&P Global Platts Analytics
Italy Refining Margin Averages ($/b)
Urals Cracking
CPC Blend Cracking
Arab Light Cracking
WTI MEH Cracking
Week ending Nov. 27
-0.21
1.82
-0.87
-0.43
Week ending Nov. 20
0.05
1.56
-0.59
-0.27
Q4 to date
1.04
2.8
0.05
0.62
Q4-19
3.4
6.84
1.88
4.05
Q3-20
0.28
2.17
-1.78
-0.06
Q2-20
-1.31
3.01
2.95
-2.98
Source: S&P Global Platts Analytics