The role of price assessments in the refined products market A benchmark price is a standard reference point used by the industry to represent the current market value. This is a price you need to have confidence in as it regularly acts as a starting point for contract negotiations, procurement decisions and business planning. Having access to open, transparent pricing information helps you to mitigate risk exposure and help ensure your business retains a competitive edge.S&P Global Platts Refined Products solution gives you a definitive, unrivaled view of the market: must-see benchmark pricing, powerful data, forecasts, breaking news, insight and analytics. Our strict, robust methodology guidelines mean our global team of editors and analysts is price neutral, editorially independent, and fully transparent. Our Market on Close methodology for assessing petroleum products’ physical prices means our benchmarks consistently reflect market value.LAUNCH REPORT
Russia's war on Ukraine has already disrupted more than 2 million b/d of crude and oil products supplies from the world's second biggest crude exporter, according to S&P Global Commodity Insights, as both official sanctions and industry avoidance crimp flows.>The biggest casualty so far is Europe which imports about 30% of its oil from Russia including 1.5 million b/d of mostly diesel and gasoil.A collapse in demand for Russia's oil in the region has already seen Urals crude prices hit record global exports means more countries could be forced to replace its vital energy flows.Click here to view the infographic in full size
Russia's invasion of Ukraine has triggered an unprecedented wave of sanctions against Moscow which are rippling through global commodity markets. In addition to official sanctions which continue to evolve, major self-sanctioning by industries looking to cut ties with Russia have deepened the market impact.Click here to see the full size version
In Europe, with a hot summer ongoing and a cold winter expected, re-establishing secure sources of energy in light of Russia's war in Ukraine is a top priority.S&P Global Commodity Insights reporters Shivani Pandya and Sasha Foss speak with crude oil director Joel Hanley about plans to address the crunch in European natural gas supply, and how a return to oil-fired power generation is not as simple as some might suggest.Subscribe to Platts Dimensions Pro for access to assessments and premium content covering the front-month TTF natural gas benchmark (GTFTM01), European fuel oil (AAYWT00), and much more.This podcast episode was produced by Jennifer Pedrick from Houston.More listening options:
In this episode of the Oil Markets podcast, light ends pricing editors Sarah Hernandez and Jordan Daniel and US clean products manager Matthew Kohlman discuss the record-high gasoline prices that are impacting drivers across the US. They discuss historically low inventories, how a shortage of octanes is driving up prices for premium grades, what the outlook is for gasoline demand, and prices through the rest of the summer.This Oil Markets podcast was produced by Jennifer Pedrick in Houston.More listening options:
Asian gasoil and gasoline cracks have surged in May, amid the war between Russia and Ukraine that started in late February. Asian refineries are looking to raise run rates or delay their planned maintenance this spring to meet the demand.In this podcast, S&P Global Commodity Insights' experts—Jonathan Nonis,Reetika Porwal and Joshua Ong from the Platts pricing team and J.Y. Lim, advisor for Asia-Pacific oil markets -- discuss the contributing factors and the future trajectory of the markets. More listening options:
Russia has long supplied European and US markets with fuel oil. In light of the war in Ukraine, where is this fuel going and how can the usual buyers make up the shortfall?S&P Global Commodity Insights reporters David Petutschnig and Chloe Davies discuss with Joel Hanley how the dynamics of high sulfur fuel oil and vacuum gasoil are changing fast.Explore our special report Inside Fujairah: A gateway for energy and commodities in the Middle EastMore listening options:
Jul 26 2022
Japan will start formal policy discussions July 28 to introduce a fourth round of refining regulations aimed at boosting the processing volume of vacuum residue, with preferential treatment expected for efforts to decarbonize the refining process, sources told S&P Global Commodity Insights July 26. The talks will be launched by the Ministry of Economy, Trade and Industry's natural resources and fuel committee, which will present ideas for new regulations and review regulatory responses from the last round that expired at the end of March, the METI sources said. The new regulations would likely follow the framework of the third round of regulations, with new elements relating to decarbonization efforts by refiners to be considered as part of the regulatory response, the sources said. The refiners' potential use of blue and green hydrogen instead of gray hydrogen in the refining process could be considered among the decarbonization efforts, the sources added. The third round of regulations required refiners to achieve a national target vacuum residue ratio, the daily residual processing volume as a percentage of the daily crude processing volume, of 7.5% by the end of March 2022. Given a significant drop in Japanese refiners' refining volumes in the past two years because of the pandemic-led demand slump, Petroleum Association of Japan President Tsutomu Sugimori said March 22 that "It will be difficult to achieve." "However, we are in the midst of emergency situations such as the coronavirus pandemic and the Ukraine issues, so that we expect to see some sort of mitigation," Sugimori added at the time. Previous regulations The third round of regulations introduced in 2017 focused on increasing processed volumes at residue cracking units across Japan's refining fleet with improvements in productivity. The previous two rounds of regulations had led to a reduction in Japan's overall crude distillation capacity. The third round of regulations required refiners to increase processing volumes of vacuum residue by the end of fiscal year 2021-22 (April-March) from baseline average volumes processed over FY 2014-15 to FY 2016-17. Under its definition, vacuum residue has a true boiling point of more than 565 degrees Celsius. This includes atmospheric residue, vacuum residue, vacuum gasoil and other residues processed at fluid catalytic cracking and residue fluid catalytic cracking and cokers. In order to comply with the third round of regulations, refiners had been expected to revamp their facilities, including carrying out work to upgrade pumps and change catalysts to be able to process more residues at units such as FCCs, RFCCs and cokers by the end of March 2022. Japan's nameplate refining capacity was 3.5188 million b/d across 22 refineries as of March 31, 2017 down 7.1% from 3.7897 million b/d earlier, following local refiners' response to the earlier rounds of refining regulations. The country's operable refining capacity stood at 3.4578 million b/d across 21 refineries at the end of March 2022.
Jul 18 2022
US President Joe Biden just wrapped up a trip to the Middle East with a closely watched visit to Saudi Arabia. His national security director signaled that the success of his oil diplomacy will be judged in the coming weeks, not immediately. So will OPEC+ agree to increase production at its Aug. 3 meeting to help ease global prices? Ellen Wald, president of Transversal Consulting and senior nonresident fellow at the Atlantic Council's Global Energy Center, spoke with senior editor Meghan Gordon about the debate around Saudi Arabia's spare oil capacity, US-Saudi relations, and how Russia likely loomed over the talks. Stick around after the interview for Jordan Blum with the Market Minute, a look at near-term oil market drivers. Related content: Biden presses Saudi leaders to act through OPEC+ to increase oil supply in coming weeks High stakes for oil markets, Mideast security as Biden heads to Saudi Arabia Oil production test looms for OPEC heavyweights Saudi Arabia, UAE More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).
Jun 30 2022
Demand for transportation fuels has been picking up in Asia, as higher vaccination rates and improved mobility push regional economies to open up to near pre-pandemic levels. Global oil supplies, however, are not keeping pace with this recovering demand. China's move to inject more fuel supplies into the Asian market by way of a supplementary second round of oil products export quotas in early June is unlikely to help prop up regional demand-supply balances. Moreover, China's oil product exports in 2022 are likely to fall from 2021 levels as Beijing aims to minimize outflows to meet its net-zero target. Refining margins for clean transportation fuels like gasoil, jet/kero and gasoline skyrocketed to historical highs earlier this month. Even as cracks have inched lower since, expectations are these valuations will stay elevated in the foreseeable future. In this podcast, S&P Global Commodity Insights' Rajesh Nair , Su Yeen Cheong , Oceana Zhou and Zhuwei Wang shed light on the current situation and discuss the scenarios that are likely to play out in the Asian clean fuels markets in the near to medium term. More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).
Jun 22 2022
Platts, part of S&P Global Commodity Insights, is seeking feedback on whether Russian material is part of the open spot market reflected in Platts European benchmark gasoline, LPG, and jet fuel assessments Platts has observed that an increasing number of market participants are restricting material from Russia, in part or entirely, in their spot gasoline, LPG, and jet fuel trading activity. Platts is seeking immediate feedback on whether the basis definition of open origin for its gasoline, LPG, and jet fuel assessments should continue to include Russian-origin material, or whether it should reflect the market move toward trading non-Russian material. Unless otherwise stated, Platts benchmark assessments in these markets currently reflect an open-origin basis, which could potentially include Russian-origin supply. All Platts assessments reflect merchantable commodities. Platts gasoline, LPG, and jet fuel assessments include FOB and CIF cargo markets in Northwest Europe and the Mediterranean, as well as FOB barges and coasters and FCA rail assessments. Platts is seeking clarity on whether participants in all these markets are adopting a similar stance with regard to Russian-origin material. Platts has already excluded Russian product from its European naphtha, diesel, and gasoil cargo assessments. The relevant subscriber notes are available here and here. Please send all immediate feedback, questions, or comments to Europe_Products@spglobal.com and PriceGroup@spglobal.com. For written comments, please provide a clear indication if comments are not intended for publication by S&P Global for public viewing. S&P Global will consider all comments received and will make comments not marked as confidential available to the public upon reque
Jun 01 2022
Existing open origin diesel, gasoil cargo assessments exclude Russian origin from June 1 New CIF NWE ULSD cargo assessment launched June 1, reflecting all origins Seeking more feedback on Russian-origin material in ARA barge markets Effective June 1, Platts, part of S&P Global Commodity Insights, no longer reflects Russian-origin product in its open origin European diesel and gasoil cargo assessments. At the same time, Platts has launched a new assessment for ULSD cargoes CIF NWE reflecting all origins. The decision by Platts follows a review into the continued inclusion of Russian-origin material in its European diesel and gasoil assessments, announced in a subscriber note published April 14: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/041422-s-p-global-seeks-feedback-on-russian-product-in-platts-european-diesel-gasoil-assessments Feedback gathered from the market, as well as observed market activity in recent weeks, had shown a significant move away from Russian-origin material in the spot market. Platts had observed that many market participants were now restricting material from Russia, in part or entirely, in their spot diesel and gasoil trading activity. Platts assessments reflect the value at which a standard, repeatable transaction for merchantable material takes place, or could take place, in the open spot market at arms length. Although Russian product continues to flow to the European market, Platts understands that it is not trading on the same basis as product from other origins in the spot market, and that there is a difference in value between Russian and non-Russian product. As a result, with effect from June 1, the Platts assessments listed below exclude Russian-origin product. ASSESSMENT DETAILS: From June 1, the Platts European diesel and gasoil cargo assessments consist of: Diesel Outright assessments: CIF Open origin* Restricted origin (excluding Russia) All origins (including Russia) ULSD 10 ppm CIF NWE: AAVBG00 ULSD 10 ppm CIF NWE (restricted origin): AAURO00 ULSD 10 ppm CIF NWE (all origin): ALORA00 Diesel 10 ppm CIF NWE**: AAWZC00 Diesel 10 ppm CIF NWE (restricted origin)**: AATRO00 Diesel 10 ppm UK cargo CIF NWE: AAVBH00 Diesel 10 ppm UK cargo CIF NWE (restricted origin): AAVRO00 Diesel 10 ppm UK cargo CIF NEW Basis UK MOPS diff: AUKMA00 ULSD 10 ppm CIF Med Cargo: AAWYZ00 FOB Open origin* ULSD 10 ppm FOB NWE: AAVBF00 ULSD 10ppm FOB NWE**: AAWZD00 ULSD 10 ppm FOB Med Cargo: AAWYY00 Diesel Spread assessments: Restricted origin spreads (restricted origin vs open origin*) All origin spread (all origin vs open origin*) ULSD 10 ppm Cargoes CIF NWE restricted origin spread: AAURP00 ULSD 10 ppm Cargoes CIF NWE All Origin Spread: ALORB00 Diesel 10ppm Cargoes CIF NWE restricted origin spread**: AATRP00 Diesel 10ppm UK Cargoes CIF NWE restricted origin spread: AAVRP00 Gasoil 0.1% Outright assessments: CIF Open origin* Gasoil 0.1%S CIF NWE Cargo: AAYWS00 Gasoil 0.1%S CIF Med: AAVJJ00 FOB Open origin* Gasoil 0.1%S FOB NWE Cargo: AAYWR00 Gasoil 0.1%S FOB Med: AAVJI00 *From June 1, all open origin European diesel and gasoil cargo assessments exclude Russia-origin product **basis CIF Le Havre The calculations for the associated freight netback and freight netforward European gasoil and diesel assessments remain unchanged as of June 1. However, Platts continues to monitor prevailing trade flows and review the plausible load ports in these calculations, including the continued inclusion of Russian load ports. NEW CIF NWE ULSD CARGO ASSESSMENT: Platts understands that there continues to be a flow of Russian product into Europe, and market feedback has suggested a continued need for transparency in this market. As such, Platts has launched a new assessment for ULSD cargoes CIF NWE (all origins), which reflects material from all origins, including Russia. Other parameters and specifications of the new assessment are the same as the existing ULSD 10 ppm CIF NWE cargo assessment (AAVBG00). Platts is publishing the outright value of this new assessment in $/mt, as well as the spread reflecting the value of cargoes from all origins versus restricted origin cargoes. SEEKING MORE FEEDBACK ON ARA BARGES: Platts understands there are logistical differences between the Amsterdam-Rotterdam-Antwerp barge market and European cargo markets, particularly around the demonstration of origin of product. As such, Platts has invited further feedback on whether Russian-origin material should also be excluded from its European diesel and gasoil barge assessments, and how origin of product would be demonstrated in these markets. Please send any feedback, questions or comments to email@example.com and firstname.lastname@example.org. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.
May 19 2022
The recent round of Q1 earnings calls for US refiners and upstream producers were almost unanimously upbeat. Crude prices of $100+/b oil and unusually high natural gas prices, coupled with changing oil flows from the war in Ukraine, have sparked buoyant US diesel demand while the need for energy security has led to a climbing rig count in both the domestic shale patch and more offshore projects. Americas oil news director Jeff Mower sits down with senior downstream editor Janet McGurty and senior upstream editor Starr Spencer to discuss recent trends and future outlooks for US producers and refiners. This Oil Markets podcast was produced by Jennifer Pedrick in Houston. More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).
May 05 2022
From the maximization of middle distillates yields by refiners to the impact of Chinese lockdowns on the Asia petrochemical sector, our editors explore the implication for European gasoline's blending margins. In this episode of the Oil Markets podcast, EMEA refined products associate editorial director Francesco Di Salvo speaks with gasoline editor Lucy Brown and naphtha editor Vinicius Maffei about the reasons for the record spread between gasoline and naphtha in Northwest Europe, a key measure of blending economics. This Oil Markets podcast was produced by Jennifer Pedrick in Houston. More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).
May 04 2022
California regulators unanimously approved two landmark renewable fuel projects planned for the northern part of the state which involves converting petroleum-based refiners into renewable fuel production facilities. The Contra Costa County Board of Supervisors late May 3 approved the land use permits necessary for both Marathon Petroleum and Phillips 66 to move forward with the conversions of Marathon's Martinez plant and Phillips 66's RodeoRenewed project, which involves repurposing its Rodeo refinery into one of the US's largest renewable fuel facilities. The Board also approved Marathon's Final Environmental Impact Report, concluding the required environmental review process under the California Environmental Quality Act. Phillips 66 had received approval for their FEIR in March. "The latest vote paves the way for Phillips 66 to make a final investment decision on Rodeo Renewed in the coming weeks," said Phillips 66's May 4 statement. Phillips 66 tests the waters with Unit 250 Before announcing the complete conversion of its Rodeo, California, refinery in August 2020 to run completely on renewables, Phillips 66 had planned to convert one unit of the refinery's units– Unit 250 – to renewable service, a move which has proven lucrative as well as instructive for the company to learn about feedstock economics and the LCFS market. "We're able to get all the volume of out of Unit 250 to the end consumer through our retail and wholesale customers in California," said Brian Mandell, Phillips 66's head of refining on the April 29 earnings call. With the approval of RodeoRenewed, Phillips 66 plans to produce 50,000 b/d, or 800 million gal/yr, of renewable diesel, renewable gasoline and sustainable aviation fuel beginning in early 2024. Marathon's JV with Neste While both refiners are converting refineries to take advantage of federal credits and state credits under the state's Low Carbon Fuel Standard law, they are taking different tacks in reaching their goals. Marathon recently signed a 50-50 joint venture with Finland's Neste, a global leader in producing renewable diesel and sustainable aviation fuel. Under the deal, which was contingent on Marathon getting the Final Environmental Impact Report, Neste will provide $1 billion to cover half the projected development costs through completion. The partners will split the output equally with each party responsible for obtaining their own feedstock and selling their share of the plant's production. "The project will utilize existing process infrastructure, diverse inbound outbound logistics and is optimally located to support California's LCFS goals while strengthening MPC's footprint in renewable fuels. Our intended partnership with Neste also creates a platform for additional collaboration within renewables," said Mike Hennigan, Marathon's CEO on the May 3 results call. Neste is the largest global producer of SAF, with 100,000 mt/yr capacity, which will rise to 1.5 million mt/yr by end-2023 once the expansion of its Singapore facility is competed. Marathon expects the plant to start up in the second half of 2022, with production capacity of 260 million gal/yr of renewable diesel. The pretreatment unit is expected online in 2023, giving it greater feedstock flexibility at which time the plant will ramp up to 730 million gal/yr by end 2023. According to S&P Global Commodity Insights, US renewable diesel production reached the 1 billion gal/yr in 2021 and is expected to grow exponentially as more projects come online. Falling LCFS prices less impactful on economics As more renewable projects come online, the price of the of California's LCFS has been falling as the credit bank is rising, growing by 1 million credits in Q4. The LCFS is layered into the USWC price of RD and SAF along with the federal blenders tax credit and the value of the RINs, which are the credits used by refiners and other obligated parties to meet the annual renewable volume obligation set by the Environmental Protection Agency's Renewable Fuel Standard. "LCFS price is proportionally one of the smaller drivers in the overall proposition" said Marathon's Partee, adding the average price of D4 RINs is ranging between $1.70 and $1.80 as well as the $1/gal BTC. And with Oregon, Washington and Canada beginning new programs based on California's LCFS program RD producers are anticipating greater demand for renewable fuels and opportunities for more regional credits. Despite low LCFS pricing, Partee said the company is quite happy with results from Marathon's Dickinson, North Dakota, renewables plant which came online last year. "I think it bodes well for the resiliency .... for RD over the long term," he said.
May 04 2022
The Asian middle distillates complex is expected to remain volatile during May 4-6, with market participants keenly watching for developments on the possibility of an embargo on Russian oil in the EU, which could lead to importing countries in the EU increasing their reliance on Asian barrels. At 11 am Singapore time (0300 GMT), the front-month July ICE Brent crude oil futures contract was at $105.78/b, up 81 cents/b (0.77%) from the May 3 settlement. Jet fuel/Kerosene ** Activity in the Asian jet fuel/kerosene complex is expected to remain steady to slightly lower later in the week amid ongoing regional holidays, which will see many market participants away from desks. ** While some supply concerns remain -- due to large outflows from China and soaring freight rates which have worsened arbitrage economics and trapped more barrels of jet fuel within the region -- sources said a level of support has been placed under the Asian jet fuel/kerosene market. It has seen a steady increase in demand as more countries reopen borders and with airlines scheduling more flights to meet air travel demand. ** Brokers pegged the balance-month May-June jet fuel/kerosene time spread at plus $5.35/b at 0300 GMT May 4, up 85 cents/b from plus $4.50/b at the Asian close April 29, S&P Global Commodity Insights data showed. ** The FOB Singapore jet fuel/kerosene cash differential was assessed at plus $1.43/b to Mean of Platts Singapore jet fuel/kerosene assessments at the April 29 close, up 15 cents/b, or 11.72%, from the start of the week on April 25, S&P Global data showed. ** Japan's jet fuel stocks rose 4.5% week on week to 4.88 million barrels over April 17-23, according to latest Petroleum Association of Japan data released April 27. The increase comes on the back of a hike in jet fuel output, which rose 10% on the week to 1.19 million barrels for the week ended April 23. The data also showed that Japan's jet fuel outflows were up 7.6% on the week to 543,815 barrels for the week ended April 23. ** The Q3-Q4 jet fuel/kerosene swap spread averaged plus $7.89/b over April 25-29, up from plus $6.91/b the week before. Gasoil ** Increasingly viable arbitrage economics, amid growing expectations of the EU sanctioning Russian oil product exports, are providing an additional measure of support to an already tight Asian gasoil complex. Robust gasoil cracks continue to incentivize refineries to maximize their yield of gasoil, and export any excess barrels. ** Brokers pegged balance-month May-June Singapore gasoil at plus $8.40/b at 0300 GMT May 4, ticking lower by 19 cents/b from plus $8.59/b at the Asian close April 29. ** The May EFS spread was pegged at minus $71.62/mt at 0300 GMT May 4, widening $7.10/mt from minus $64.52/mt at the April 29 close. ** Singapore's onshore commercial middle distillate stocks fell 21.94% week on week to 7.04 million over April 21-27, snapping two straight weeks of increase, Enterprise Singapore data released late April 28 showed. Total inflows of gasoil into Singapore were recorded at 213,024 mt in the week to April 27, outpaced by total outflows of 260,622 mt. ** The Q3-Q4 gasoil swap spread averaged plus $8.98/b over April 25-29, up from plus $7.46/b the week before.
May 03 2022
Marathon Petroleum, the largest US refiner, is ramping up rates at its refineries, with expectations of reaching 95% capacity in the second quarter to meet the rising demand for both diesel and gasoline as the summer driving season looms. The company is deferring some planned work to capture the strong current spot market environment, "backloading" the company's 2022 turnaround work, according to Ray Brooks, Marathon's head of refining, on the May 3 results call. "With current demands, we are really seeking to maximize our refining system as indicated by the second-quarter guidance," Brooks said, adding, "what this really means...is that we've looked at some fixed bed catalyst changes that we had planned for [Q2]. We've determined we have a little bit as far as catalyst activity. So we've deferred that out later in the year. "We're working right now to maximize distillate production across our system. Just to give you a little more color on that, that's something that we look at daily, make sure that we're maximizing the total recoverable distillate, the endpoint, and maximizing the front end of the distillate," he said. Increased ULSD exports tighten the USAC market Marathon, like its peers, has been running in maximum distillate mode to take advantage of global rising diesel cracks from tight supplies and backwardation in distillate markets. The company's total exports averaged 200,000 b/d at the end of Q1 and have moved up to an average of 250,000 b/d and 300,000 b/d so far in Q2, with barrels moving primarily into Latin America, but with some barrels moving to Europe. Brian Partee, Marathon's head of clean products, said that increased distillate exports have tightened the US Atlantic Coast market, which is seeing lower European imports as well as lower flows up the Colonial Pipeline, the main conduit of refined products from the USGC refiners to New York Harbor. But this is a function of timing, and the "run-up in the prompt front end of the cycle," he said, allowing Marathon to capture current high diesel prices immediately through export rather than waiting for the time it takes diesel to move up the Colonial Pipeline. However, that dynamic is beginning to ease as the spread between the price of US Atlantic Coast ULSD and USGC export diesel is widening, drawing imports into the USAC. Platts assessments showed USAC ULSD diesel barges held a 91.4 cent/gal premium of USGC ULSD export price May 2, compared with the 33 cent/gal premium so far in 2022. "I think you're reading the tea leaves right as you look forward and think about less Russian exports and European complex starting to find a way to rebalance the New York Harbor market," he told an analyst on the call, adding the Colonial Pipeline is a "forward opportunity, more structural and longer term," he said. Unusual times Restrictions on Russian petroleum exports following its incursion into Ukraine in February have had a particular impact on the global diesel supply. Russian middle distillate exports, which averaged 1.1 million b/d in February, fell to 943,000 b/d in March and 868,000 b/d in April, Kpler data showed. The extreme volatility with distillate cracks and the backwardation of distillate markets is creating an unusual situation in oil markets at a time when refiners historically switch to maximum gasoline mode to build up inventories, which are lagging the five-year average. Total US gasoline inventories stood at 230.8 million barrels for the week ended April 29, according to the most recent Energy Information Administration data. However, like its peers, Marathon is constantly looking at the economics of making diesel versus making gasoline as it prepares for the summer driving season looming at the end of May with the Memorial Day weekend, while looking to take advantage of the backwardation in the diesel market. "Our plan right now is to run really, really full, and run really, really hard during gasoline season this year," Brooks said.
Apr 22 2022
US refiners are taking their plea to the public with a new ad campaign launched by Fueling American Jobs Coalition asking President Biden to lower gasoline prices by fixing the Environmental Protection Agency's Renewable Fuel Standard, which mandates volumes of renewable fuel blending required by refiners. "This new ad campaign comes as experts warn that the broken RFS is adding up to 30 cents/gal at the pump, and as Russia's war in Ukraine and record inflation push gas prices to near-record levels nationwide," the group said in an April 22 statement. US gasoline prices are soaring just ahead of the summer driving season as a result of low inventories, the return of demand post-pandemic and more expensive crude oil, with some gasoline prices touching levels not seen since 2008, when crude prices hit $145/b. US Gulf Coast cracking margins for WTI MEH are extremely high, averaging $35.76 so far in Q2 2022, up from the $20.84/b in Q1 2022, margin data from S&P Global Commodity Insights showed. Stripping out the cost of RINs – the credits issued by the RFS and bought by refiners who are unable to blend enough renewables into their fuel to meet their renewable volume obligations – these margins drop by about $4/b to average $30.89/b in Q2 and $16.33/b in Q1 illustrating the impact of the RFS on refining margins and the cost of fuel. Fueling American Jobs Coalition advocates an overhaul of the RFS to lower gasoline prices. Its campaign comes on the heels of President Biden's April 12 waiver to increase the use of renewable fuels by raising the blending volumes of less expensive ethanol into summer grade gasoline to 15% from 10%. In a world of tight supply, increasing ethanol blending to 15% will indeed add supply and help lower gasoline prices for E15 consumers by about 3%-7%, according Renewable Fuels Association's president Geoff Cooper. But the overall impact will be blunted by limited access by most US drivers to the higher ethanol fuel. "It's becoming widely available – slowly – but at last check some 2,500 gas stations in the US offered it, mainly in the corn belt areas and the Midwest," said Patrick De Haan, analyst with Gasbuddy.com, which tracks gasoline demand and usage at 140,000 stations throughout the US and Canada. Market tightness to continue There is contentious and litigious history between the renewable fuel lobby and the refiners, spanning back to 2005 and the inception of the RFS as part of the Energy Policy Act of 2005. That law sought to protect US energy security from foreign oil risk by incentivizing renewables. This was prior to the shale revolution, increased crude production and the US becoming a major exporter. John Auers, executive vice president at Dallas-based consulting firm, Turner Mason, said Biden's recent decision to allow E15 use is not expected to add a lot more ethanol into the gasoline pool. ""It's a political win. But not a giant one. And not super impactful on the market itself," he said. "There is not going to be a lot more ethanol that actually moves into the pool." According to Renewable Fuel Association estimates, 814 million gallons of E15 was sold in the US in 2021 with an ethanol content of 122 million gallons. The E15 summer waiver will only add about 30 million gallons of ethanol to the pool. Globally, tight gasoline and diesel supply stems from a spate of refinery closures, as the drop in demand due to coronavirus lockdowns culled less efficient plants. "It's a big deal. We've lost 3.5 million b/d of refining capacity globally. And that's made everything tight," Auers said. US gasoline supplies are holding just below the five-year average at 232.4 million barrels for the week ended April 15, the most recent US Energy Information Administration data showed. But supply in the central US Atlantic Coast is extremely low, well-below the five-year average at 26.95 million barrels for the week ended April 15, EIA data shows, amid a slowdown in imports from Europe. Refinery closures continue Even with the rebound in demand, high refinery margins and low fuel supply, refiners are still closing their doors, with many citing the high cost of complying with the RFS as a reason for shutting their doors. The latest announced closure was from LyondellBasell. In its April 21 statement, the company said was getting out of the refining business by shutting its 263,776 b/d Houston refinery after it was unable to find a buyer. In earlier statements made in September 2021, the company cited the high cost of complying with US RFS as a reason it was looking to sell the plant. "More independent refinery closures would cause catastrophic job losses, even higher gas prices and increase our nation's reliance on foreign fuel at a time when few can afford it," the Fueling American Jobs Coalition said. They are "urging President Biden and his administration to take swift action to lower gas prices, save union jobs, and protect America's energy independence by fixing the RFS once and for all," according to their statement. This is a trend which could continue due to the high cost of the RFS, which could further tighten the market. "It's a tight market now. And then we have to worry about hurricane season," Auers said.
Apr 21 2022
Poland is looking further afield and building ties with Saudi Arabia as it diversifies its sourcing of ultra low sulfur diesel following Russia's invasion of Ukraine and an upsurge in Ukrainian reliance on fuel from Poland, according to market and shipping sources. Polish ULSD imports spiked to a new record of around 701,000 mt in March, according to Kpler shipping data, far outpacing the three-month moving average of around 384,000 mt/month of diesel imports and the March 2021 level of 363,000 mt. In a never-before seen move, long-range tanker Minerva Pisces recently carried around 95,000 mt of Saudi ULSD from Yanbu to Gdansk, while around 35,000 mt arrived from BP's Rotterdam refinery in the Netherlands, split over two parcels. It comes as EU member Poland, a strong supporter of Ukraine, steps up efforts to limit reliance on Russia -- before the war Poland had taken crude from as far afield as Iraqi Kurdistan -- and as Poland's PKN Orlen is in the process of selling Saudi Aramco a stake in the country's Number 2 refinery, Gdansk. In addition, Poland is becoming the main source of fuel for war-torn Ukraine following the destruction of Ukrainian fuel infrastructure, including parts of its largest refinery, Kremenchuk, and as Ukraine has cut imports from northern neighbor Belarus, an ally of Moscow. However, the vast majority of Poland's March imports were still of Russian origin: around 525,000 mt -- almost 75% -- came from Russia's Baltic port of Primorsk, while 46,000 mt originated nearby in Lithuania, where PKN Orlen owns the Orlen Lietuva refinery at Mazeikiai. Normally Poland relies on Russia for up to 100% of its diesel imports, while East of Suez arrivals in Europe rarely get further north than the Amsterdam-Rotterdam-Antwerp hub. The dominance of Russian diesel generally precludes alternatives being shipped from ARA to the Baltic, although steep discounts for Middle East diesel may have been a factor in March, with FOB Arab Gulf 10 ppm ULSD averaging a near $10/b discount to CIF NWE cargoes, according to S&P Global Commodity Insights data. In April, Poland continues to expect arrivals from further afield. By the end of April, around 172,000 mt of Russian diesel is set to have arrived -- around 50% of total imports, according to Kpler data. However, a second long-range tanker, Polaris Bay, already delivered around 88,000 mt of ULSD from Yanbu to Gdansk on April 5. A cargo of around 30,000 mt of ULSD from West Coast India also arrived on the tanker Seasprat, having loaded from a larger vessel via ship-to-ship transfer. A second cargo of around 35,000 mt from BP's Rotterdam refinery also made its way to Poland in early April, Kpler data showed. Ukrainian dependence Poland is almost the sole conduit for meeting Ukraine's fuel needs, including military and agricultural demand, due to lack of supply from Belarus and Russia, and the closure of Black Sea imports from countries such as Azerbaijan as a result of war risk. The geography of the Carpathian Mountains limits shipments from neighbors such as Hungary or Romania. Ukraine's largest refinery, Kremenchuk, was badly damaged in a missile attack on April 2 and put out of action, while the Shebelinka Gas Processing Plant in eastern Ukraine was taken offline on Feb. 26 due to the threat of shelling. In addition, the Odesa and Lysychansk refineries were hit by air strikes in April, though both had been out of action for more than 10 years. Imports via tanker truck are an increasingly important means of supply as Russia's navy has targeted fuel depots across the country, according to Ukrainian analysts and industry sources. In 2021, Ukraine imported 8.79 million mt of petroleum products, up 9.6% from 2020, according to the state customs service.
Apr 21 2022
Latin American traders saw a few more tenders emerge April 20, although in smaller volumes as the market takes more tentative steps with freight and diesel costs declining from record peaks but remaining historically high. Several sources said Vibra, Petrobras' former fuels-distribution unit BR Distribuidora, agreed to buy one ultra low sulfur diesel cargo from BB Energy for May 24-28 delivery into Brazil, while Dominican Republic state-owned oil company Refidomsa was again seeking distillates, this time 220,000 barrels of high sulfur diesel for May 8-10 delivery. Pemex trading arm PMI awarded Novum 180,000 barrels of low sulfur diesel for April 25-30 delivery, they added. ULSD is used more for road transportation, while low sulfur diesel and high sulfur diesel are geared toward power generation needs. Prices were still high enough that several large tenders were heard to have been postponed, or possibly not awarded. Chile's COPEC was said to have delayed a request for three ULSD cargoes, while Petroecuador pushed back to April 26 from April 18 a tender to buy 1.96 million barrels of premium diesel. Raizen, another Brazilian distributor, was heard to have self-filled from its Brazil subsidiary for ULSD and gasoline tenders for its Argentina subsidiary. Brazil import parity costs remain just under the March 8 record of $179.26/b, down $2.16 day on day April 20 to $175.54/b for ULSD IPP at Santos. Other IPP or delivered cargo assessments for jet, gasoline and diesel from Mexico to Argentina have seen similar slight declines but remain highly elevated, especially for ULSD markets. Diesel or gasoil remains the sore spot as the loss of Russian supply in the global market has tipped the marginal barrels toward Europe instead of Latin America and other areas. Latin America also has come off a summer of big distillate demand for power generation because of heat waves, only to need more of the same to meet spring harvest and winter heating demand. "The US sent a lot of product to Latin America for Cammesa and winter demand," one source said. Cammesa is Argentina's wholesale power administrator. He added that a drop from record prices has brought a few more companies out looking to fill immediate needs, especially with clean freight rates much lower and ships freeing up slightly after a flurry of fixtures in early April. The clean lump-sum rate for US Gulf Coast to eastern Mexico for 38,000 mt hit a record $1.85 million on April 8, but dropped $100,000 on the day April 20 to $600,000, a level that was still in the top 10% of rates since Platts assessments began in 2015.The clean freight rate for USGC to Brazil for 38,000 mt ships reached a record w500 on April 6 for three days before backing down April 20 to w250. "Clean has come way off," the first source said. "It's a touch softer, for sure." A second source said people were waiting to see "if the Latin America world wakes up" once freight comes off. The short-distance USGC-Caribbean clean 38,000 mt rate reached a lump sum of $2.05 million on April 12, nearly double the previous record, but has since dropped to $800,000 April 20, in line with typical spikes since the assessment began in 2015. Refidomsa's high sulfur diesel award will avoid that peak rate, as happened with another tender the Dominican Republican entity awarded April 18 to Tartan/Pilot, for two cargoes of 100,000 barrels of ULSD to deliver May 9-11 and May 28-30. The premium Refidomsa paid was heard in the low teens to S&P Global Commodity Insights' Platts US Gulf Coast waterborne ULSD assessment, or about twice as high as the premium on its last ULSD tender. But as a third source said, the diesel market is tight but workable, adding: "Recent awards are going to be much higher premiums."
Apr 21 2022
South Korea is undeterred by surging crude prices and the world's fourth biggest crude importer aims to actively secure ample refinery feedstocks as local refiners maintain relatively high run rates to capture lucrative Asian refining margins, industry and market participants said over April 18-21. South Korea received 11.472 million mt, or 84.09 million barrels, of crude oil in March, up 16.9% from 71.92 million barrels imported a year earlier, latest data from Korea Customs Service showed. The March shipments were also up 6.1% from 79.28 million barrels imported in February, while crude imports during the first three months increased 15.4% year on year to 258.17 million barrels, the customs data showed. The country's crude imports are likely to maintain the upward momentum over the coming months as local refiners actively conduct spot crude purchases on top of their term supply contracts in an effort to maintain high throughput and run rates, with the primary goal of capturing robust regional refining margins and expanding oil product export opportunities. Second-month Singapore gasoil swap crack against Dubai swaps averaged $27.80/b to-date in April, compared with the first-quarter average crack spread of $19/b and the 2021 average of $9.60/b. Global crude supply is tight but oil product supply is even tighter, making an ideal market condition for highly sophisticated South Korean refineries capable of maximizing high-end fuel output and sales, according to middle distillate marketers at major South Korean refiners including S-Oil and SK Innovation. Local refiners and condensate splitters processed 79.85 million barrels, or 2.58 million b/d, of crude in February, up 8.7% from 73.48 million barrels a year earlier, rising for the seventh straight month, latest data from state-run Korea National Oil Corp showed. Refining margins are running high as various financial sanctions against Moscow are limiting Russian oil product trades, while Chinese fuel production and exports are low amid lockdowns in the country's major cities, one refinery official said, indicating that margins for diesel and jet fuel in particular are outperforming due to rapidly improving people mobility across Asia and Oceania. Russian products are scarce and the sharp decline in Chinese middle distillate supply in the regional market is a boon for South Korean transportation fuel exporters, the middle distillate marketers said. China's gasoil, gasoline and jet fuel exports tumbled 52.7% in the first quarter from the same period of 2021, amid a steep reduction in export quota allocations, S&P Global Commodity Insights reported previously, citing latest data from General Administration of Customs. In addition, China's crude throughput fell 1.5% year on year to 13.96 million b/d in the first quarter due to the dual blow of war-led lofty global oil prices as well as lockdowns imposed as a result of fresh outbreaks of COVID-19, S&P Global reported previously. Robust product sales to Australia South Korea's petroleum product sales to Australia are expected to reach a multi-year high in first-half 2022 as the Oceania fuel importer heavily favors South Korean products over Chinese supply as trade and geopolitical tensions between Canberra and Beijing persist, according to refinery sources in Seoul and fuel distribution managers in Sydney and Brisbane. South Korea is estimated to have exported around 13.6 million barrels of oil products to Australia in Q1, up 77% from a year earlier and the highest sales volume in the quarter since 15.7 million barrels were exported during the first three months in 2017, according to marketing information gathered from major South Korean refiners by S&P Global and latest data from KNOC. Australian fuel import and distribution companies have been enquiring for incremental cargoes from South Korean refiners and fuel traders in recent few trading cycles as the sharp reduction in China's fuel export quotas and most importantly the prolonged Canberra-Beijing tensions prompt Australia to heavily favor its close economic and geopolitical ally South Korea, according to the refinery middle distillate marketers. In 2021, South Korea and Australia upgraded their bilateral relationship to a comprehensive strategic partnership. Tensions between Canberra and Beijing have once again escalated in recent weeks, after China signed a security pact with the Solomon Islands in a move that could see China establishing a military base in close proximity to Australia's mainland. Top crude suppliers The customs data showed South Korea's import of US crude in March, mostly light sweet grades, slipped 3% from a year earlier to 10.87 million barrels. However, South Korean refiners combined have been receiving at least five VLCCs of US crude every month since June 2020, with the exception of December 2021. South Korea's crude imports from its top supplier Saudi Arabia, except shipments from the Saudi-Kuwaiti Neutral Zone, jumped 66.2% year on year to 31.02 million barrels in March, the customs data showed. KNOC will release detailed oil trade data for March, including crude imports from Russia, in the week of April 24. South Korea's monthly crude imports (Unit: million barrels) Crude imports Jan-21 76.87 Feb-21 74.97 Mar-21 71.92 Apr-21 83.36 May-21 80.96 Jun-21 80.17 Jul-21 78.03 Aug-21 82.83 Sep-21 78.63 Oct-21 85.13 Nov-21 80.36 Dec-21 86.93 Jan-22 94.79 Feb-22 79.28 Mar-22 84.09 Source: Korea Customs Service, Korea National Oil Corp.
Apr 21 2022
What exactly defines the origin of an oil product? How is self-sanctioning affecting Russian diesel and gasoil exports? And how is Russian-origin diesel being treated in the spot market? In this episode of the Oil Markets Podcast, Richard Swann, S&P Global Commodity Insights’ Director for clean refined products, discusses with Francesco Di Salvo, Associate Editorial Director for European refined products, the question of origin of diesel imported into Europe and the different approaches taken by oil majors and trading companies to handle Russian-origin oil products. Tell us more about your podcast preferences so we can keep improving our shows. Take our two-minute survey here: https://bit.ly/plattspod22 More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).