Global Gasoline Rally Seen Leaving Prices Vulnerable to Refinery Outages
There's no immediate end in sight for the rallying global gasoline market, with any unscheduled refinery outages expected to continue moving prices amid soaring demand growth in Asia and the U.S.
A strong summer driving season in the U.S., where gasoline demand is seen 2% higher year-on-year, "suggest the value that remains in the market lies towards the end of the third quarter," Energy Aspects said in a report today.
Competition for surplus Europe gasoline supplies has intensified, as U.S. East Coast demand and Latin American and West Africa import requirements drove robust demand, according to the London-based consultants.
Asian refineries set up to produce more diesel than gasoline are struggling to meet a 5.6% year-on-year climb in gasoline demand, scooping up high octane blendstocks in Europe.
Saudi Arabia is also importing volumes from the Mediterranean region, benefiting aging Europe refineries "inundated with buyers," the report said.
"Asia matters more for the global gasoline market than ever before," the report said.
"With the conclusion of turnaround season in Asia and Europe, global gasoline supplies are set to get a significant boost."
But the report added that "a series of problems on the U.S. Gulf Coast or in Europe could provide considerable support to cash markets with little warning." Although prompt prices may fall as supplies gain, the drop will not be dramatic, as worldwide demand strength suggests further rises, especially in September and October, according to Energy Aspects.
In northwest Europe gasoline cracks (versus Brent) are forecast to be at $9.82/bbl in, after rising as high as $12/bbl in the second and third quarters, the report forecast.
For RBOB in the U.S., cracks are forecast to average $13.89/bbl in 2015, peaking at $18/bbl in the second quarter and $16 in the third. The cracks are versus Louisiana Light Sweet crude.