Low Product Imports to Europe Driving Higher Margins

The lack of oil product imports to Europe from outside the Atlantic Basin are driving higher European refining margins according to Citigroup.

• Further tightness is expected in gasoline and a problem around gasoline supply during summer “looks inevitable” as the refining system looks to address the spike in middle-distillate margins.
• Imports are low due to robust global demand for trucks and air travel. Low product inventories in Europe and US are supportive while refinery maintenance is close to seasonal norms.
• “US strength is rubbing off on Europe,” said Eugene Lindell at FGE. Large draws in US Gulf coast gasoline stockpiles finally reflected very low run rates, setting the stage for a strong summer. Europe’s motor gasoline surplus is much smaller this year than the 2015-2019 average.
• “Supply disruptions in the US are looking very supportive for the Atlantic Basin in general,” said Philip Jones-Lux at Sparta Commodities. US exports are therefore dipping and increasing the call on European volumes into Latin America.
  • RBOB MAR 24 down -0.1% at 2.39$/gal
  • EU Gasoline-Brent down -0.2$/bbl at 18.46$/bbl
  • US gasoline crack down -0.4$/bbl at 22.53$/bbl