European non-oxy gasoline margins have held firm this month, confounding market participants as exports head for historic lows and foreign buying remains subdued.
Benchmark non-oxy barge premiums to front-month Ice Brent crude futures averaged $15.50/bl in the first half of August — up by 4.7pc from $14.81/bl a year earlier. Barge values fell by $7/t to $692.25/t between 1-15 August, while Brent declined more steeply by $3.60/bl to $66.10/bl, widening cracks.
At first glance, the year-on-year rise in non-oxy barge cracks appears difficult to explain — not least because this time last year, European suppliers had access to a largely captive west African market, before Nigeria's 650,000 b/d Dangote refinery began gasoline production.
"I'm lost for words," one trader told Argus — a view shared by others in the market.
Preliminary data point to a sharp drop in European gasoline exports in the first half of this month, limiting outlets for blenders. EU, UK and Norwegian exports totalled 1.56mn t between 1–15 August, according to Kpler tracking, down by a third year on year and the lowest daily volumes since records began in 2017.
Nigerian import demand has collapsed this year, with Dangote now meeting domestic and regional needs. Imports fell to 163,000t in the first half of August, down from 915,000t a year earlier. European gasoline accounted for less than half of these volumes.
US imports of European gasoline fell to 520,000t in the first half of August, down from 1.21mn t a year earlier, despite broadly profitable transatlantic arbitrage and tight spot Rbob supply in the New York Harbor region. Colonial pipeline flows from the US Gulf coast to the Atlantic coast remain viable, but higher refinery utilisation since mid-July has lifted domestic output and inventories, according to EIA data.
Some market participants had speculated that maintenance at Dangote's 285,000 b/d residual fluid catalytic cracker (RFCC) could support gasoline cracks in Europe this month. But local sources reported no disruption to Nigerian supply. Dangote was offering gasoline at 820 naira/litre at the time of writing, down from N860/l on 1 August. A company spokesperson denied any shutdown and challenged market participants "to place immediate orders for up to 40mn litres/day of gasoline for the next 90 days".
Meanwhile, gasoline fundamentals east of Suez appear firmer. Blending demand is strong in Asia, and fixtures from Singapore to Rotterdam could tighten supply in the Asia-Pacific region, one light ends trader said. Singapore 92R gasoline cracks to Brent averaged $10.02/bl in early August, up from $6.27/bl a year earlier.
