Northwest Europe Gasoline Margins Approach 2022 Peak on Tight Supply

Gasoline refining margins in Northwest Europe surged on Wednesday, climbing to levels not seen since the peak of the 2022 energy crisis amid persistently tight supplies and low regional inventories.

The profit margin for refining gasoline in the region increased by $3.79 to settle at $59.41 per barrel, according to market data. This sharp rise underscores the ongoing supply constraints that are supporting product prices and pushing profitability for refiners close to historic highs.

Market Activity and Outlook

Physical trading was active, with approximately 11,000 metric tons of E5 gasoline barges changing hands. Sellers included Equinor, Exxon, and MB Energy, while the buyers were Vitol, Varo, Sahara, Gunvor, and Trafigura. An additional 6,000 metric tons of E10 gasoline barges were also traded.

Analysts suggest there may be more room for prices to climb. "In the short-term, there is probably still a bit more upside for the EBOB spread," said Nikolas Plonski, an analyst at Sparta Commodities, in a note. Plonski cited expectations for renewed buying activity for E5 barges while inventories remain tight.

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Inventory and Export Data

Supporting the tight supply narrative, recent data points to strong demand and limited stockpiles. In the United States, a key market for European exports, gasoline inventories fell by 1.2 million barrels to 205.7 million barrels last week, the U.S. Energy Information Administration (EIA) reported. The draw was slightly less than the 1.8 million-barrel drop analysts had forecast.

Meanwhile, exports from the European Union and the United Kingdom have been robust. According to data from Kpler, exports of gasoline and blending components averaged approximately 1.08 million barrels per day (bpd) in August. This figure marks an increase from the average of 1.02 million bpd seen in July, indicating steady outbound flows from the region.