Benchmark Eurobob oxy grade gasoline barges changed hands at fresh record lows this morning for a second consecutive session.
Deals at prompt Argus dates were agreed at an average price of $103.50/t, the lowest since 2009, and down by $72.25/t or $8.67/bl in two sessions. Eurobob oxy's previous record low was hit yesterday when prices sank to $126/t. But this morning's price also matches the all-time low on Eurograde gasoline — which was the previous European gasoline benchmark and a finished grade — reached in December 1998.
Outright gasoline prices have dropped precipitously on the back of plunging crude values, with front-month Ice Brent crude futures pricing at $19.13/bl at 11:30 BST (10:30 GMT) today, down by $7.21/bl from the close on Monday 20 April. Brent crude futures have faced sustained downward pressure since then, when in an historic session US WTI futures changed hands at negative values.
Eurobob oxy remains at a small premium to North Sea Dated crude of around $1.75/bl, having traded at discounts to crude for several sessions in April — and a discount of as much as $7/bl in late March. But the fact that gasoline prices have fallen faster than crude since 20 April suggests that traders continue to view the Covid-19 pandemic as having a more severe impact on gasoline markets relative to crude and other oil products, such as diesel. Gasoline sales in some European regions have fallen by as much as 90pc, although there are large regional variations. Demand in major European export destinations is also weak. US gasoline demand recently fell to a 29-year low while limited stateside storage capacity is also hindering shipments on the transatlantic route. Eurobob oxy was trading at a premium to North Sea Dated crude of $4/bl as recently as 15 April.
Weak gasoline margins to crude are creating a major headache for European refiners, which typically produce a gasoline surplus. A total of 11 European refiners have been confirmed to be cutting runs across the continent, with probably around 1.6mn b/d of capacity offline as a result. Mediterranean refiners are even being forced to shut down entirely amid a slump in demand and a lack of storage capacity. Other refineries are delaying restarts following maintenance because of a lack of demand for core products.
