Firmer Demand and Supply Concerns Support Gasoline Cracks

A small recovery in US gasoline demand and lower domestic production due to refinery outages have drawn supplies from Europe this month. US gasoline demand has picked up slightly in the last couple of weeks compared to the end of December according to both GasBuddy and EIA data.

• Shipping oil products to the US has been boosted by the firmer demand and also a fall in clean tanker freight rates. Clean medium range tanker rates on the UK-US Atlantic coast route on 11 Jan had fallen over 44% from the 57.43$/t on 9 Dec according to Argus.
• Gasoline crack spreads continue to rally with the higher demand and with concern for supplies after the EU ban on Russian products from 5 Feb. US gasoline crack has gradually risen from around 20.5$/bbl on 6 Jan to 31.2$/bbl today.
• Upcoming strikes at French refineries over the coming couple of weeks could add to the upside pressure.
• Gasoline demand is at a seasonal low point at this time of year and is normally expected to see a gradual increase over the coming months.
  • US gasoline crack down -0.2$/bbl at 31.25$/bbl
  • US ULSD crack up 0.8$/bbl at 63.41$/bbl
  • EU Gasoline-Brent down -1$/bbl at 17.62$/bbl
  • EU Gasoil-Brent up 1.2$/bbl at 45.02$/bbl