XM does not provide services to residents of the United States of America.

Power Up: Gasoline margins' summertime blues 



<html xmlns="http://www.w3.org/1999/xhtml"><head><title>Power Up: Gasoline margins' summertime blues </title></head><body>

Power Up is published on Mondays and Thursdays. Think your friend or colleague should know about us? Forward this newsletter to them. They can also subscribe here.

June 17 - Welcome to Power Up. I'm Liz Hampton, the energy markets editor at Reuters and your Monday Power Up Author. With the summer driving season underway, we're going to take a look today at global gasoline markets. Margins for refiners from Asia to the U.S. have weakened as supplies ramped up in recent weeks in anticipation of demand which hasn't quite hit the mark. Some companies are already pulling back on production, a move that could hit crude demand. Let's dive in. 

Refiners around the globe have been pumping out more gasoline, a moneymaker for these businesses as vacationers take to the road during the summer. But demand is falling short of expectations, especially in the U.S., the world's largest gasoline market - a shift that is hitting margins.  

The health of the gasoline market has wide-spread implications, particularly for oil prices, which are already down some 9% since mid-April. Some of that has been driven by news that OPEC and allies plan to begin phasing out some production curtailments after September, but concerns around global fuel demandare also a major factor. 

U.S. crude inputs at refineries are about 3.3%above the four-week average, at 16.94 million barrels per day, according to the Energy Information Administration. They declined slightly in the first week of June to roughly 17 million bpd. 

In Asia, the profit for making gasoline from Brent halved in the final week of May to about $4 per barrel. In Europe, margins are down to around $10.80 as of last week, their lowest since January, and in the U.S. the value of turning West Texas Intermediate crude into gasolinewas under $22.50 a barrel for the first time since February. 

Weaker gasoline margins could extend run-cuts, which would weaken demand for crude oil. In Asia, Taiwan's Formosa Petrochemical Corp - one of the largest refined products exporters - has already planned cuts this month. 

In the U.S., refiners were at around 95% utilization, which is actually not terribly far where we were a year ago. Demand, however, hasn't kept pace. The four-week average for product supplied, a proxy for demand, was down about 1.3% year-on-year, at around 9.1 million bpd.

U.S. gasoline stocks are currently up by 5.7 million barrels since the start of April and by early June, were at their seasonal highest since 2021.

The jump in stocks comes asrefinery expansions and start-ups around the world are coming online, including the massive Dangote refinery in Nigeria. In the U.S., oil refining capacity rose by 1.5% to 18.38 million bpdthis year, according to an EIAreport published last week. This is in part due to the startup of the 250,000-bpd expansion at Exxon Mobil's Beaumont, Texas, refinery. 

Still, there could be some relief ahead.U.S. refiners cut output last week for the first time since April. China's output slipped 1.8% from year-ago levels in May, government data showed, amid unplanned maintenance and as higher crude costs pressured margins. 

ESSENTIAL READING

More than 800 coal plants worldwide could be profitably decommissioned and replaced by cleaner solar energy start from the end of this decade, according to a reportby the Institute for Energy Economics and Financial Analysis (IEEFA).

Russia has boosted oil revenuesas exporters are charging more for their oil in Indiaas a growing number of shippers and intermediaries take part in trade, Jonathan Saul and Nidhi Verma report. Exporters had been offering steep discounts to encourage shipping companies and traders to move the crude and risk running afoul of sanctions. 

The Mountain Valley natural gas pipelinehas kicked off serviceafter many delays. The $7.85 billion system will move gas from West Virginia to Virginia, unlocking supplies from the Appalachia shale fields. 

Venezuela's oil minister called for a federal court to halt the auction of shares of Citgo Petroleum's parent company amid concerns that the country will lose a strategic foreign asset. The deadline for submitting offers in a second bidding round was last week, and the sale is expected to be completed next month. 

Microsoft is planning to invest $7.16 billion to develop new data centers in Spain's northeast Aragon region, making a third major cloud computing hub in Europe. The company recently announced a 2.1 billion euro investment in data centers in Madrid. 

Finally, I want to take a moment to acknowledge Natalie Grover, an energy correspondent on our London team who passed away unexpectedly over the weekend. The Reuters team is deeply saddened by this loss and extend our sympathy to her family, friends and loved ones. If you'd like to read Natalie's work, here is a linkto her journalist page. 

We hope you're enjoying the Power Up newsletter. We'd love to hear your thoughts and feedback. You can reach us at: powerup@thomsonreuters.com



Editing by Marguerita Choy

</body></html>

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.