Lower Crude Prices Puts a Swell on the US Margins

US margins got a boost from lower crude prices, while distillate cracks stubbornly remained range-bound as the countdown to IMO 2020 marches forward, reports Platts.

Fall in crude prices

Crude prices fell last week on concerns of a slowing economy as focus turned to the Trump Administration’s ongoing trade war with China. 

The front-month ICE Brent and NYMEX crude contracts closed out the week ended August 16 down about 20.5% and 16.6%, respectively, from yearly highs reached in April.

The front-month US Gulf Coast ULSD crack to WTI fell to average $20.13/b for the week, down from the $20.76/b the week earlier, Platts data showed. 

During the same time period, the six-month crack fell to $20.30/b from $20.42/b, while the 12-month crack rose slightly to $21.70/b from $21.63/b.

US West Coast margins rise

On the US West Coast, refining margins rose despite a fall in container traffic at the Port of Long Beach in California. 

Volumes of inbound traffic at the largest US container port dropped 11% quarter on quarter as the Trump Administration escalated its trade war with China.

USWC coking margins for Ecuadorean Napo crude rose to $14.57/b the week, up from the $13.08/b the previous week, according to S&P Platts Analytics data.

USWC margins rose as Napo’s discount in relation to WTI fell to minus $2.45/b for the week, compared with the minus $2.24/b discount the week earlier, Platts price assessments showed.

Also helping support a stronger USWC was an uptick in Los Angeles CARB diesel prices to average $1.86/gal for the week, up from the $1.81/b the week earlier.

The slowdown in shipping did not translate into lower ship fuel prices, as 0.1% marine gasoil delivered into the Port of Los Angeles rose to average $79.58/b for the week, compared with the $78.86/b the week earlier, Platts prices show.

Q3 prices of 0.1% marine gasoil prices are averaging $82.80/b, below the Q2 average of $98.03/b.

Atlantic Coast margins project upwards

US Atlantic Coast margins ticked higher last week, aided in part by a pump problem with a crude unit at Monroe Energy’s 190,000 b/d, which cut rates to a weekly average of about 175,000 b/d.

USAC Bonny Light cracking margins rose to $8.90/b for the week, up from the $8.76/b the week earlier, according to Platts Analytics margins.

So far in the third quarter, New York Harbor 0.1% marine gasoil prices are averaging $84.80/b, below the Q2 average of $90.80/b, Platts price data shows, despite an increase in shipping into the Port of New York and New Jersey.

Size-able increase in PANYNJ

June volumes of TEU’s, or twenty-foot shipping containers, into PANYNJ rose 5.9% year over year, due in part to increased loaded containers. 

But exports of loaded containers fell 2% during the time period, and exports of unloaded containers rose 13.9% as trade slowed.

In 2018, China was the top export destination and importer into the Port of New York and New Jersey, according to the port statistics.

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Source: Platts

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