Story
Northwest European Gasoline Margins Fall as Rising Crude Costs Squeeze Refiners
Summary
Gasoline refining margins in Northwest Europe fell to $42.55 per barrel on Wednesday, pressured by a significant increase in crude oil prices. The drop comes amid a slight build in U.S. gasoline inventories and ongoing refinery maintenance in Texas.
Gasoline refining margins in Northwest Europe declined on Wednesday as strengthening crude oil prices increased input costs for refiners. The profit margin for producing gasoline from crude dropped by $1.49 to settle at $42.55 per barrel.
Trading and Market Drivers
The primary driver for the margin compression was the rise in crude oil, the key feedstock for refineries. When the cost of raw materials rises faster than the price of the finished product, profitability for refiners is reduced.
Trading activity in the region's barge market was moderate. According to market data from Argus:
- 2,000 metric tons of Eurobob E5 barges were sold by ExxonMobil to Gunvor.
- An additional 2,000 tons of Eurobob E10 barges were sold by Finco to Varo.
In a separate transaction reported in the Platts window, Exxon Mobil also sold an E5 barge to Trafigura.
AdUS Inventories and Supply Factors
In the United States, weekly data from the Energy Information Administration (EIA) showed a slight build in gasoline stockpiles. U.S. gasoline stocks increased by a marginal 7,000 barrels to reach a total of 211.3 million barrels.
On the supply side, Motiva Enterprises is reportedly conducting repairs on a boiler linked to a gasoline-producing fluidic catalytic cracking unit at its 656,400 barrel-per-day Port Arthur, Texas refinery. The information came from two people familiar with plant operations on Tuesday. Any extended outage at such a large facility could tighten gasoline supply in the U.S. market.
Meanwhile, preliminary shipping data indicated that 39 commodity vessels passed through the Bab el-Mandeb strait on Tuesday, the highest daily count since July 19, signaling a potential increase in transit through the key waterway.
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