Europe oil/products: Further gains in gasoline and naphtha cracks Friday after US stock data

9 Jul 2021

Quantum Commodity Intelligence - Naphtha and gasoline prices and cracks surged higher again Friday, while the propane bubble burst, amid another rally in Brent.

September Brent rallied throughout the day amid the ongoing impasse in the OPEC+ group and Thursday’s bullish US weekly oil statistics from the US Energy Information Administration, which revealed large draws in crude and gasoline.

“The EIA data showed that US crude continues to fly out of storage as the domestic economy picks up and the summer travel season gets closer,” noted analysts from Rystad.

“The seventh consecutive week of massive crude draws is extraordinary and the market noticed, but the bigger news came from gasoline demand, which increased a whopping 870,000 bpd last week to surpass the 10 million bpd, a record in EIA bookkeeping.”

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Despite a small build of 500,000 barrels in US propane stocks last week, propane cargo prices only gained $4.25/mt ($0.33). Meanwhile, naphtha cargo prices gained $24/mt ($2.70/mt), and its premium above naphtha widened to $57.25/mt. Meanwhile, naphtha stocks in ARA also dipped again last week, dropping to 215,000 barrels from 240,000 barrels a week earlier, and extending a decline since May 27 when they reached around 320,000 barrels, according to data from Insights Global.

Gasoline barge prices saw strong gains Friday after the 6.1 million barrels fall in US gasoline stocks last week. Backwardation remains wide. Eurobob E5 barges traded at $6/mt above August paper. E10 traded at a premium of $7/mt to the front month paper. Premium unleaded gasoline barges traded between $731 and $733/mt at the end of the day, up $21.75/mt ($2.61/b) from Thursday.

Jet cargoes traded twice, one at $23/mt and the other at $23.50/mt above August Low Sulfur Gasoil futures. Jet cargo prices gained $18.50/mt ($2.34/b). Stock levels in ARA increased last week, and remain high, according to sources.

Low sulfur Gasoil futures in July gained $17.80/mt ($2.35/b) to lift middle distillate cracks in Europe. But there were no diesel, 50ppm or gasoil barge trades reported Friday amid the surging flat prices.

The spread between high sulfur and marine fuel (0.5% sulfur) barges widened again, with the former gaining $11.75/mt and the latter gaining $15.75/mt. High sulfur fuel oil cracks have come under pressure this week, and ARA stocks increased 200,000 barrels last week, according to Insights Global, which likely reflects refiners increasing high sulfur fuel oil straight runs amid high crude prices.