European gasoline glut affects global margins
As a result, gasoline stocks in Europe reached a record-high as exports fell due to increased refinery runs in Nigeria and the United States. This led to the profit margins for European and U.S. refineries to fall to a 15 month low in January. Gasoline profit margins usually fall in the winter due to lower seasonal demand. However, the magnitude of the drop is a major blow for refiners who are now facing low margins on petrochemicals. Diesel provides some relief to overall margins. This short-term problem adds to the structural problems facing European refineries due to poor performance and stricter green regulations. Over the last 20 years, Europe has seen dozens of refineries close, and many more are on their way. Some European refiners depended on gasoline exports because Europe is a net producer of road fuel. However, the Dangote refinery opened in Nigeria last January has reduced the demand for fuel imported from Europe. As a result, gasoline stocks in Europe's main trading and refining hub - Amsterdam-Rotterdam-Antwerp, or ARA - hit record highs of 1.54 million metric tons in January.
Data from analytics firm Kpler revealed that European gasoline exports fell 9% on an annual basis in the fourth quarter, to 1,07 million barrels a day. This was mainly due to lower shipments into Nigeria and the U.S.
According to Kpler's data, Nigerian gasoline imports from Europe dropped by 29% over the past year to 146,000 Bpd in fourth quarter last year. This is the lowest volume recorded for this period.
The data shows that U.S. imports of gasoline from Europe dropped 18% in the last year to 240,000 barrels a day in December.
Margins fall
According to LSEG, the ARA gasoline profit margin dropped to $4.25 a barrel on January 15, its lowest level since October 2023.
The data revealed that the average European gasoline margins in January 2025 of $6 per barrel was the lowest since 2019, when the average European gasoline refining profit margins were minus $2.21.
Patrick De Haan said that European gasoline exports into the United States were slow because of the strong U.S. refinery output and the higher shipments to major East Coast cities from the U.S. Gulf Coast Refining Hub.
According to the Energy Information Administration, the U.S. refinery produced 9.28 million barrels of finished motor gas in the week ending Jan. 10. This is 6% more than the seasonal average over the past five years.
LSEG data shows U.S. margins for gasoline
The well-supplied markets in Europe and America also affected the margins of gasoline refiners in Asia
Two U.S. gasoline traders have said that European exports may pick up in the next few months, as U.S. refining plants will undergo maintenance in the spring. The traders asked to remain anonymous as they were not permitted to speak to the media.
The European gasoline market, as stocks grew in Europe, has entered contango. This is a pricing structure where fuel delivered immediately costs less than fuel delivered later. It is profitable to keep stocks and then sell them at a profit.
Philip Jones-Lux, analyst at Sparta Commodities, said: "Market structure... now pays quite nicely to store barrels in the ARA and then wait for maintenance kick-in and demand to pick up to release those volumes again." (Reporting and editing by Enes Tunagur, Shariq Khan and Trixie Yap, and Alex Lawler, Dmitry Zhdannikov Simon Webb, and Jan Harvey).
(source: Reuters)
