Europe: Demand for crude oil refined products remains sluggish in Europe, as the region’s growth is constrained by macroeconomic factors.
However, an extended winter led to good heating demand for gasoil, particularly impacting the German 50ppm gasoil market.
Demand for ultra-low sulphur diesel (ULSD) also picked up in May, as a result of the approaching summer season.
Gasoline demand was lower than expected, despite the approach of the US driving season, while naphtha demand slowed down on the spring maintenance season.
Nevertheless, the reduced supply of refined products because of the spring refinery maintenance season balanced refinery output with the slow demand in Europe.
US: In the first quarter of 2012, US gasoline seems to have peaked earlier than normal. The current 2013 retail average peak price to date for a gallon of regular unleaded gasoline in the US is $3.79, which was recorded on 27 February.
US products, including gasoline and distillates such as jet fuel and diesel, should see a boost in consumption rates stemming from the upcoming busier summer travel season.
However, prices may not reach the highs seen in 2012. Recent storms, particularly in the Midwest region, have curtailed production rates, and lower consumption of US products has capped prices from rising further.
The upcoming production switch to more expensive summer blend gasoline in order to ease emissions begins at retail stations on 1 June. This will cause gasoline prices at the pump to rise even if consumption rates stay low.
Naphtha reached a high of $3.2675/gal in mid-February, then steadily declined to a low of $2.2300/gal on 6 May. Sources said a couple of down reformers have also weakened demand for naphtha.
Updated to mid-May 2013