Gasoline Cracks Supported by Upcoming EU Ban on Russian Products

Gasoline crack spreads continue to rally with US up from 14.7$/bbl in mid December to 26.5$/bbl and the EU spread up from 0.5$/bbl to 13.5$/bbl in the same period. The potential for tighter gasoline supplies following the EU ban on Russian products from 5 Feb is supporting the spreads despite current weak demand data.

• The loss of naphtha and vacuum oil from Russia following the EU ban will complicate the production of gasoline and will potentially cut supply, particularly in Europe according to Energy Aspects. Russia are very big suppliers of naphtha for EU and US Gulf refiners for gasoline blending.
• The loss of VGO may cut FCC run rates at European refiners with little feedstock available, although US refiners may be able to source alternative supplies from Venezuela and from the US Gulf Coast. The start-up of middle East refineries Jazan and Al-Zour may limit straight-run fuel oil supplies to the US.
• A recovery and higher demand in China could limit products available for export with volumes potentially lower than implied by the export quotas.
• US gasoline crack down -0.3$/bbl at 26.19$/bbl
• US ULSD crack up 1.3$/bbl at 58.41$/bbl
• EU Gasoline-Brent down -0.2$/bbl at 13.15$/bbl
• EU Gasoil-Brent up 1.4$/bbl at 37.66$/bbl