European gasoline barge profit margins hit a seven-month high this week, boosted by firm export demand from West Africa and the United States and regional refinery shutdowns.
Barge margins versus dated Brent reached more than $7 a barrel, based on Reuters calculations, their highest since early March.
A wave of coronavirus-related travel restrictions, which hit a peak in April in Europe, drove margins deep into negative territory.
As some of these restrictions return to cities like Paris, Madrid and parts of Britain, traders are not expecting the current stronger price trend to last.
Exports from northwest Europe, particularly to West Africa, have helped, with around 1.2 million tonnes being shipped along that the route in September, a six-month high, based on Refinitiv data.
While demand in Nigeria, a main export market for Europe, has been on the rise, new price regulations could have a negative impact on demand in West Africa’s biggest gasoline consumer.
“Nigeria imports around 300,000 barrels per day of gasoline, mainly from Europe; so any loss in Nigerian demand will negatively affect European refiners who rely on the West Africa region as an outlet for surplus gasoline,” consultancy FGE Energy said.
Exports of European gasoline and gasoline components to the United States also rose in September to almost 1.2 million tonnes, 30% higher than August and highest level since March.
The exports were mainly supported by the rise of road traffic in the United States and low activity of refineries in North America, recently affected by several hurricanes.
“Right now the United States needs to import more gasoline because demand is recovering, while crude runs remain severely depressed,” said Paola Rodriguez-Masiu, Rystad Energy’s senior oil markets analyst.
With refinery maintenance in Europe at a peak in October, lower local production is also supporting margins.
Traders expect 1.7 million bpd of offline refining capacity this month, before falling to 1.1-1.2 million bpd in November.
– Reuters