The Mediterranean gasoline market is diverging from northwest Europe as heavier refinery maintenance in the region weighs on supply, market participants said.
Several Mediterranean fluid catalytic cracker (FCC) units are under maintenance, traders said. Work includes Helleniq Energy's 146,500 b/d Aspropyrgos refinery in Greece and Eni's 241,000 b/d Milazzo refinery in Italy.
Helleniq confirmed late last year that Aspropyrgos would undergo a February–March turnaround. Sources said earlier this month that maintenance at Milazzo includes shutting down the FCC for the first time in six years. It is unclear whether the current work is planned or unplanned. Milazzo has also faced recent unplanned FCC issues, sources said.
Refinery maintenance in northwest Europe is comparatively light, a European analyst said. Crude distillation unit (CDU) and FCC capacity currently offline — planned and unplanned — is near the lower end of the 2018-25 range.
Tighter supply in the Mediterranean has supported balance-of-February Mediterranean swaps, which have traded at a slight premium to March Mediterranean oxy swaps since 19 February, according to gasoline brokers. A backwardated structure is unusual for this time of year. The market is normally in contango during winter, reflecting soft prompt demand for winter grades and the higher blending costs for summer grades from March–April.
Backwardation is likely to persist to the end of February as cargo offers thin out, a Mediterranean trader said, although they added that the February–March spread is "massively overdone". West Mediterranean cargoes are trading at a $4–9/t discount to front-month March Mediterranean oxy swaps, the trader said.
In northwest Europe, February balance-of-month Eurobob oxy swaps were trading at a $4.75/t discount to March equivalents on 23 February, swap brokers said — compared with a $1/t premium in the Mediterranean.
Stronger Mediterranean cargo values have improved arbitrage economics to move gasoline from Amsterdam-Rotterdam-Antwerp (ARA) to west Mediterranean ports. The incentive to move a 30,000t cargo rose over the last four sessions to $16.61/t at the close on 23 February, according to Argus calculations.
Consultancy Insights Global reported consistent loadings from independent ARA gasoline tanks in recent weeks. ARA-to-west-Mediterranean arrivals are likely to increase in March, the Mediterranean trader said.
