MOSCOW (MRC) -- U.S. gasoline prices are rising strongly, encouraging refineries to maximise gasoline production, even as they struggle with lacklustre demand for jet fuel due to international quarantine restrictions, said Hydrocarbonprocessing.
Based on futures prices, gross margins for making gasoline from U.S. crude oil have surged to more than USD24 per barrel, up from just USD10 at the start of the year, and the highest level since 2015. Driving the rise in prices is a much faster recovery in demand for gasoline than for other oil products as economies reopen.
Margins are now in the 84th percentile for all weeks since the start of 2006, giving refiners a strong incentive to maximise production, even as they hold back output of other fuels. Rising margins have pushed the average retail cost of gasoline above $3 per gallon, its highest level since 2014, according to nationwide pump prices compiled by the U.S. Energy Information Administration (EIA).
Gasoline accounted for 63% of the total output of the big three fuels (including diesel and jet) last week, among the highest weekly shares since 2009/10. Gasoline inventories amounted to 234 million barrels, less than 1% above the pre-epidemic five-year average for 2015-2019.
Consumption was just 3% below the pre-epidemic five-year average, with stay-at-home orders lifted, travel to work restarting and most businesses open. Consumption has recovered much faster than for products as a whole, still down almost 6% last week, or refineries’ crude processing, down almost 9%. High margins will ensure refiners squeeze as much gasoline out of the process as possible – even as they continue to limit crude runs to avoid producing unwanted jet fuel.
As per MRC, U.S. traffic volumes have almost returned to pre-pandemic levels, helping normalise gasoline consumption as more businesses re-open, domestic leisure travel resumes and workers return to offices. The volume of traffic on all roads was down by less than 4% in March compared with the same month two years ago, according to the Federal Highway Administration (“Traffic volume trends” FHWA, March 2021). Traffic levels had been down 41% in April 2020 at the height of the first wave of the pandemic and were still down 11% as recently as December 2020 during the second wave.
As per MRC, Countries around the world have reported steep falls in fuel demand as lockdowns to contain the spread of the novel coronavirus limit the movement of more than 4 billion people. U.S. fuel demand has dropped 28% in the last four weeks, the Energy Information Administration said on April 29. Overall finished motor gasoline demand is still down 44% over the past four weeks from the year-ago period, but a drawdown in stocks in the previous week suggests the consumption declines may be leveling off. Jet fuel demand was down 62%.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.
MRC