Oil Products Summary at European Close: Gasoline Cracks Weakening

Gasoline cracks reversed earlier gains to be down slightly on the day, while diesel spreads are also falling this month amid weak fuel demand. Diesel cracks remain relatively robust compared to historical levels amid low stocks and tight supplies ahead of the winter heating season.

• US gasoline crack down -0.5$/bbl at 10.89$/bbl
• US ULSD crack up 0.1$/bbl at 38.81$/bbl
• US refiners are expected to keep producing too much gasoline in the months ahead, causing prices to keep finding downward pressure despite higher oil prices according to OPIS analyst Tom Kloza.
• US gasoline demand last week (Sun-Sat) stood at 8.64mbpd, down by 0.8% on the week and 1.4% below the four-week moving average according to GasBuddy.
• Retail prices for diesel in the US Midwest region are expected to fall in the coming weeks, as agricultural demand falls and supply is drawn from the USGC and Chicago pipelines, according to traders who spoke to Reuters.
• The return of refineries from seasonal maintenance has driven Russian oil processing to the highest in seven weeks according to Bloomberg. Processing increased by 210kbpd week on week to 5.48mbpd in the week to 25 Oct.
• Russia is planning to boost diesel shipments from its western ports in the Black and Baltic Seas by 56% on the month in November to 2.16mbpd
• Russian fuel prices at domestic filling stations have stabilized according to Deputy Prime Minister Alexander Novak.
• Chinese state-owned refiner margins are close to breakeven levels – while teapots are marginal after a run-up in futures prices and lackluster demand according to OilChem.
• High-sulfur fuel oil margins for Asian refiners are at risk of further downside after the US eased sanctions on Venezuelan oil according to FGE.
• Germany’s oil consumption is expected to have plummeted in 2023, driven by falls in diesel and naphtha, as sluggish industrial output hampers oil demand, according to Bloomberg.
• TotalEnergies is looking at postponing planned work on a gasoline producing unit next year at its Antwerp refinery according to Bloomberg sources. The unit is currently undergoing unscheduled maintenance.
• ExxonMobil restarted a coker at its 522,500 bpd Baton Rouge refinery, Louisiana last Thursday night according to Reuters sources over the weekend.
• Japanese petchem producer Mitsui Chemical shut its Sakai-based cracker on October 28 because of pipeline issues according to Argus sources – reducing immediate demand for naphtha.
• Global weekly passenger jet fuel demand is set to increase following almost two months of straight declines, according to BNEF.