Europe plays increasing role in US gasoline market
The current state of the crude oil and refining industry in the Northern Atlantic basin has led to excess European gasoline production playing a vital role, says Jeffrey Kerr, a New York-based analyst with GlobalData.
That additional European production is saving the US East coast from shortages, he said.
For its part, Europe has also seen its share of refinery closures over the past two years.
A combination of high crude oil prices and relatively low refined product prices, as well as dismal gasoline and middle distillate demand growth prospects, have resulted in a number of high-profile refinery closures and company bankruptcies, Kerr noted.
But the US East coast refining market has been impacted by the same factors, with large refineries in the Philadelphia area shut down, threatened to be shut down, or sold to new owners.
That has kept the supply of motor fuels tight amid the traditional summer driving season, when gasoline demand usually rises, Kerr explained.
“While it’s not new for Europe to send its excess gasoline to the US in the summertime, the magnitude of those shipments this year is much higher,” said Kerr, GlobalData’s senior analyst of downstream oil and gas.
“The shut refineries in the Philadelphia area and the Caribbean have really changed the dynamic of the East Coast marketplace, causing wide swings in cash market prices.”
Since the East coast gasoline cash market sets the price for the rest of the US through the futures market, European refiners are having a direct impact on US gasoline markets from coast-to-coast, he said.
For more details on the report, visit GlobalData’s website by clicking here.
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