Refiners in Europe are making the highest profit from producing gasoline in more than eight years amid speculation that demand for the fuel is surging globally, driving up prices.
Gasoline’s premium to Brent crude, a measure of profitability, climbed to $20.10 a barrel on Wednesday, according to data from broker PVM Oil Associates Ltd. That’s the highest since May 2007, according to the data cited by Bloomberg.
Europe produces more gasoline than it needs and relies on exports to offload its surplus, with the region increasing shipments of the motor fuel to countries in West and North Africa in the first quarter, researcher JBC Energy GmbH said in a report.
Delays in projects to expand production in countries including the United Arab Emirates have helped boost exports in recent weeks, according to Barclays Plc.
“Demand for gasoline is extremely strong worldwide,” Robert Campbell, New York-based head of oil products research at Energy Aspects Ltd., said by phone. “Europe is the main source of export-orientated gasoline and there is a lot of competition for these cargoes between Latin America, West Africa, the US and even East of Suez, which is bidding up barrels.”
European plants are supplying more fuels to the global market to compensate for delays in expanding refineries in the Middle East and Latin America, the International Energy Agency said in a June 11 report. The adviser cited refineries including Abu Dhabi National Oil Co.’s Ruwais plant, Indian Oil Corp.’s Paradip site and Ecopetrol SA’s Cartagena in Colombia.
“It’s more Europe inheriting a global phenomenon of a more conducive demand side, and supply-side upsets, than specific local factors pushing up margins,” Miswin Mahesh, a London-based commodities analyst at Barclays, said by phone June 15.
India’s gasoline consumption rose 19 percent in April, outpacing growth of 13 percent in March, ministry data show. China’s demand increased by 133,000 barrels a day this year, demonstrating “remarkable resilience,” while the nation’s diesel demand has fallen, according to the IEA.
Strong gasoline margins will persist until at least the end of the third quarter, supported by the US driving season, according to Mahesh. US gasoline demand climbed 1.1 percent to an average of 9.39 million barrels a day in the four weeks ended June 5, the most since August 2010, Energy Information Administration data show.
