The current state of the crude oil and refining industry in the Northern Atlantic Basin has led to excess European gasoline production playing a vital role, saving the US East Coast from shortages, says GlobalData’s expert analyst Jeffrey Kerr.
Economically-hard hit Europe has seen more than its fair share of refinery closures over the past two years. A combination of high crude oil prices and relatively low refined product prices, as well as dismal gasoline and middle distillate demand growth prospects, have resulted in a number of high-profile refinery closures and company bankruptcies.
The US East Coast refining market has been impacted by the same factors, with large refineries in the Philadelphia area shut down, threatened to be shut down, or sold to new owners, keeping the supply of motor fuels tight amid the traditional summer driving season, when gasoline demand usually rises.
Jeffrey Kerr, GlobalData’s Senior Analyst of Downstream Oil & Gas in New York, said: “While it’s not new for Europe to send its excess gasoline to the US in the summertime, the magnitude of those shipments this year is much higher. The shut refineries in the Philadelphia area and the Caribbean have really changed the dynamic of the East Coast marketplace, causing wide swings in cash market prices.”
Since the East Coast gasoline cash market sets the price for the rest of the US through the futures market, Kerr added, European refiners, now more so than ever before, are having a direct impact on US gasoline markets, coast-to-coast.