Light Ends: Outside of the US, naphtha cracks rose w/w. Supply side concerns dominated this week and pushed naphtha prices higher as Russian exports remain low and weakening runs at Dangote limited Atlantic basin supply. Gasoline blending and petchem demand remain subdued, which will allow balances to lengthen over the next month as supply normalizes.

Gasoline: Glimmers of strength in PADD 1 are providing an outlet for NWE gasoline while overall refinery margins in Europe continue to tank, heightening expectations of run cuts. Asian markets continue to move sideways as ongoing outages counteract mediocre buying elsewhere. Looking ahead, August seems poised for some downward pressure as regional balances lengthen m/m.

Middle Distillates: The build-up in gasoil departures to Europe of late, as well as the end of turnarounds, continue to spell trouble for regional gasoil markets, with negative simple margins having not yet resulted in tangible evidence of run cuts. Meanwhile, Dangote’s mild hydrocracker starting operations adds further pressure to the West of Suez market, with about 40 kbd of additional gasoil set to enter the regional market over the weeks ahead. In the East of Suez, we expect to see Chinese exports picking up over the near term, on the heels of quota underutilization, which coupled with narrowing EFS spreads and seasonally weakening demand should weigh on regional markets for the time being.

Residue: Inefficient and aging fuel oil-fired power plants have been gradually removed from grids in many parts of the world as the use of cleaner and lower-cost alternative fuels has increased. Although some utilities still have an energy mix with fuel oil, fuel oil will remain at the bottom of the dispatch order this year, given the well-supplied natural gas market and strong HSFO cracks. However, fuel oil, as a peak-load and emergency fuel, often demonstrates its resilience and reliability in an abnormal environment.

Freight: Clean MR rates in Asia dropped sharply over the last two weeks, depressed by lower exports in both the North and South, leading to a build in prompt tonnage. In Europe, MR rates rose as a result of higher fixing activity and a slowdown in laden arrivals from outside the region. US MR rates are holding up despite a weak balance which could see rates decline next week. LR2 rates fell further as competition from Suezmaxes continues.

^{Did you know?}‍

Our analysts share this type of research on a daily basis via Kpler’s Insight service.

Through unbiased, expert-driven research and news, you’ll receive valuable information on supply, demand, and market movements, enabling you to make informed trading and risk management decisions.

If you haven't explored the service yet or would like to dive deeper into data from this report you can book a demo here.