Chemical News
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NWE gasoline crack spreads overtake ULSD, first since Mar 2010
https://www.chemnet.com May 11,2011 Platts
Physical gasoline cracks have overtaken ultra low sulfur diesel cracks for the first time in over a year, as strength in the US gasoline market is supporting values in Northwest Europe.
A measure of profitability, crack spread is the price difference between a barrel of crude and the product made from it. On Monday, European gasoline barge cracks hit a $5.45/barrel premium to ULSD barge cracks in NWE, having first risen above diesel cracks Thursday. It's the first time gasoline cracks have traded above diesel since March 9, 2010, according to Platts data.
Gasoline cracks have been trading at $18/b this week, while ULSD cracks have traded around $13/b.
In recent months the spread between the two products has narrowed as the US gasoline market has strengthened, trading sources said.
"The US is certainly driving it, the RBOB crack is over $40/b in the front," a trader said. "There is good momentum for the gasoline crack in the US, this is helping Europe and leaving distillate behind."
The US gasoline market is structurally net short and looks largely to Europe to supply it with additional volumes.
In direct contrast the European diesel market is structurally net short and looks to the US and Asia to provide it with additional volumes.
With gasoline cracks overtaking diesel cracks refiners will look to adjust their configurations where they can to optimize gasoline production, trading sources said
"With prices like this, those refiners who can make RBOB will be doing it," a trader said.
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