Northwest Europe Gasoline Margins Approach 2022 Highs on Tight Supply

Gasoline refining margins in Northwest Europe surged on Thursday, approaching record levels last seen during the 2022 energy crisis. The key indicator of refinery profitability jumped by $2.45 to $61.86 a barrel amid persistently tight supplies in the region, according to market data.

Regional Inventories and Trading

Despite the tight supply narrative, gasoline stocks in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub saw a significant build. Data from Dutch consultancy Insights Global showed that inventories increased by nearly 18% to 885,000 metric tons in the past week.

Insights Global analyst Rick Veringmeier attributed the inventory rise to lower exports to other regions, while also noting that blending activity for motor fuel was increasing. In physical trading, several deals were reported:

• Exxon Mobil and MB Energy sold a combined 6,000 metric tons of E5 gasoline barges to Gunvor and Trafigura.
• Shell and Sahara sold 10,000 tons of E10 gasoline barges to Varo and Exxon.

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Contrasting US Data and Outlook

In contrast to the European inventory build, U.S. gasoline stocks declined. The Energy Information Administration (EIA) reported on Wednesday that U.S. inventories fell by 1.2 million barrels to 205.7 million barrels in the week ending August 28.

Analysts suggest the upward pressure on European margins may continue. "In the short term, EBOB spreads may have further upside to go, particularly over the next two weeks as we roll into the September window seeing renewed buying activity in E5 barges, with inventories remaining tight," said Nikolas Plonski, an analyst at Sparta Commodities.