Refiners' margins for gasoil, gasoline to fall by 2023

138
2
Refiners' margins for gasoil, gasoline to fall by 2023

A SINGAPORE industry analyst said on Wednesday that there will be a divergence between refiners' margins for gasoil and gasoline until the middle of 2023 as margins for the industrial fuel rise due to the European Union ban on Russian oil.

She said that it will be a very difficult process to adjust when the ban takes effect, which will continue to push gasoil margins higher. She said that gasoline will be dumped into the market as a byproduct since the summer driving demand season is over.

Gasoline consumption has come under pressure due to high fuel prices curbed demand for the motor fuel, while gasoil has been underpinned by tight global supplies due to the decline of exports from Russia as a result of the Ukraine war.

Since the beginning of the Russia-Ukraine crisis in February, gasoil cracks have more than doubled to $32.57 a barrel over Dubai crude, while gasoline margins have weakened by over 96 per cent to 43 cents per barrel over Brent crude oil, according to Refinitiv data. The divergence fluctuates based on seasonal demand cycles but is typically much narrower.

Naphtha margins fell by over 100 per cent in the same period, falling to a discount of $1.65 a tonne over Brent crude.

Russian exports could fall further as the EU bans Russian oil product imports from Feb. 5, although the Group of Seven nations are working on a Russian oil price cap to minimize supply disruptions while limiting Moscow's oil revenues.

P 66's spokesman said that Asian refiners may not produce enough gasoil to meet the winter specifications for the product in some European countries.

It is not just a molecule rearrangement. She said that not many refineries in the East can meet the winter specification of gasoil in Europe.