REFINERY MARGIN TRACKER: US margins trend higher after gasoline demand rose ahead of July 4

US refinery margins were generally higher -- with only the US West Coast trending weaker – buoyed by stronger gasoline demand ahead of the July 4 weekend, an analysis from S&P Global Platts showed June 12.

Fueled by pent up demand for travel due to coronavirus pandemic lockdowns in 2020, a surge in travel ahead of the long July 4 holiday weekend drew down national gasoline stocks by 6.1 million barrels, while demand surged to a record high of 10.043 million b/d, according to most recent Energy Information Administration for the week ended July 2.

"Gasoline stocks are now at 235.5 million barrels, at the low end of the range for the past several years with days cover also continuing to normalize," wrote S&P Global Platts in a recent research note.

This jump in gasoline demand for the week before the July 4 weekend is not expected to be sustained for the week ended July 9.

"We expect demand to pull back next week as downstream marketers work off their inventories. We are calling for demand for the week ended July 9 to average 9.38 million b/d," the note said.

However, margins for the week ended July 9 remained strong – ahead of the weekly inventory and demand metrics from the EIA, which is due to be released on July 14.

US Gulf Coast cracking margins for the week ended July 9 for WTI MEH rose to $12.54/b, up from the $11.98/b the week earlier, according to margin data from S&P Global Platts Analytics.

For the week ended July 2, Midwestern refiners ran their plants at 98.8% of capacity – the highest level since August 2019 – but increased output did nothing to dampen cracking margins.

US Midwest Syncrude cracking margins averaged $15.72/b for the week ended July 9, compared with the $15.36/b the week earlier.

USAC margins near par with European margins

On the US Atlantic Coast, regional refiners ran at 89.1% of capacity for the week ended July 2, with Bonny Light cracking margins averaging $10.11 for the week. For the week ended July 9 – which included the long holiday weekend – they rose to $10.45/b, Platts Analytics margin data showed.

However, the RIN-less USAC Bonny Light cracking margin averaged $5.09/b for the week ended July 9 putting it close to parity to European margins. The Northwest Europe and Mediterranean cracking margins for Bonny Light for the week ended July 9 averaged $5.15/b and $5.13/b, respectively.

USWC margins soften

Margins on the US West Coast were weaker, with Alaska North Slope cracking margins falling to average $16.37/b for the week ended July 10, compared with the $16.77/b the week earlier.

This was due in part to lower regional demand as well as the return of the Olympic refined products pipeline after planned work. The BP-owned pipeline stretches from Washington refineries clustered around Anacortes to Portland, Oregon, and is a key supplier of gasoline and diesel to the region.

In California, driving mobility averaged 138.35 for the week ended July 9, compared with the 142.04 for the week ended July 3, according to Apple COVID-19 mobility trends, which uses January 13, 2020, as baseline for measurement.