Margins Dip as Financial Risks Offset Short Term Upside Pressures

Diesel and gasoline margins are edging down with risks of lower demand due to the financial sector turmoil offsetting upside fundamental pressures.

• Both gasoline and distillates showed sizeable draws in the weekly EIA data yesterday with total US inventories for both still towards the lower end of the five year range despite a recovery so far this year.
• Gasoline has been supported by a gradual rebound in US demand this year and the switch to summer grade gasoline ahead of the increased demand expected during the summer driving season.
• Lower diesel exports from Asia in February and March are also supportive while uncertainty still surrounds Russia output following the EU and G7 sanctions. Russian refinery runs have dipped this month amid seasonal maintenance and the domestic crude production cuts.
• The refinery maintenance season has also provided support to refined products. EIA data yesterday showed a recovery in Gulf Coast refinery rates with maintenance coming towards the end, but East Coast rates are the lowest in a year.
• A short term drop in output from French refineries due to strike disruption could be coming to an end shortly with industrial action at Donges scheduled until 16 March.
  • US 321 crack down -0.6$/bbl at 36.72$/bbl
  • US gasoline crack down -0.4$/bbl at 34.91$/bbl
  • US ULSD crack down -0.9$/bbl at 40.35$/bbl
  • EU Gasoline-Brent down -0.1$/bbl at 17.23$/bbl
  • EU Gasoil-Brent down -1.1$/bbl at 22.9$/bbl