Source: U.S. Energy Information Administration, from Bloomberg, L.P., Thomson Reuters. Note: Dubai/Oman crude oil spot price is the average spot price of Dubai crude oil and Oman crude oil.
Gasoline crack spreads
in the United States, especially on the U.S. East Coast, have reached
several-year highs in recent months. Crack spreads, which reflect the
difference between wholesale product prices and crude oil prices, are a
good indicator of refiner profitability.
For example, in April
2015, wholesale conventional gasoline in New York Harbor averaged $1.79
per gallon (gal), and the Brent crude oil spot price averaged $1.41/gal
($59.39 per barrel, divided by 42 gallons per barrel). The difference in
prices results in a crack spread of 38 cents/gal, the highest crack
spread for the month of April since 2007.
Strength in gasoline
crack spreads can also be seen in regions beyond the United States. In
the European gasoline market, the Northwest Europe gasoline-Brent crack
spread averaged 35 cents/gal in April, the highest since at least April
2010. In Asia, the Singapore gasoline-Dubai/Oman crack spread averaged 39 cents/gal in April, similar to levels last year and 3 cents/gal below the recent high in April 2012.
Because gasoline specifications,
refinery maintenance schedules, and seasonal demand patterns are not
uniform across the world and can influence gasoline crack spreads at
different times of the year even within a region, comparing crack
spreads on a year-over-year basis allows for a better understanding of
the strength of gasoline prices in a given region. The main factors
contributing to the global rise in gasoline crack spreads this year are
the lowest crude oil prices in several years, robust U.S. gasoline
consumption and exports, and higher-than-expected demand for liquid
fuels in Europe and some countries outside the Organization for Economic
Cooperation and Development (OECD).
Refiners in many regions of
the world have been processing larger volumes of crude oil to take
advantage of these higher gasoline crack spreads. On the U.S. East
Coast, average gross inputs
to refineries in April were the most for that month of the year since
2010. Refineries in Europe, where, for years, the refining sector had low profitability, now have increased refining utilization rates amid improving margins. Although
April gasoline crack spreads in Asia did not exceed recent record
highs, Asian refineries have been processing more crude oil compared to
the same time last year as margins from gasoline and other petroleum
products in that region have remained strong since the first quarter of
2015.
http://theenergycollective.com/todayinenergy/2230801/low-crude-oil-prices-increased-gasoline-demand-lead-high-refiner-margins