Asia surges gasoline exports to the U.S. at ultra-high prices

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(Bloomberg) — The deterioration of gasoline crunches seems to boost refiners in Asia, especially those in India. This is because the high prices in the United States are driving the increase in exports.

As the summer driving season approached, US pump prices exceeded $ 4 per gallon for the first time in all states. JPMorgan Chase & Co. Predicts this week that US gasoline could skyrocket to $ 6.20 per gallon by August. This will be more than double the price a year ago.

Motor fuels have been taken over from diesel as the main focus of fuel supply concerns. The tight market is expanding the global refining system that has been closed by Covid-19 over the past few years. In Asia, the gasoline margin has doubled since the end of March to more than $ 33 a barrel, surpassing the diesel margin eased from its peak in early May.

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“The tightness of the Atlantic Basin, especially the United States, should continue to see Asian petrol barrels pulled west,” said FGE analyst Dylan Sim. “This is primarily from India, and some major refineries in the country postpone planned maintenance from August to September.”

Industry consultants said the gas shortage in Asia will shrink from an estimated 260,000 barrels in June to 110,000 barrels in the three months from September as the plant recovers from maintenance and the Malaysian PRefChem facility goes up. This should provide more scope for local processors to increase their exports.

See: Gasoline metrics flash red in the tight and costly US summer

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Shipments in India may come from private refiners such as Reliance Industries and Nayala Energy, as state-owned processors are obliged to meet domestic demand. Nationwide gasoline exports jumped to a record high of 1.6 million tonnes in five years in March, the latest data show. With domestic prices unchanged since early April, refiners are sending as much fuel as possible abroad.

A potential factor limiting the amount of gasoline that Asia can send to the United States is a recovery in demand in China or an accelerated consumption in other regions. Crude oil processing in Asia’s largest economy fell to its lowest level in more than two years last month, but could recover soon if China can put off the worst wave of current virus outbreaks.

Wood Mackenzie analyst Max van der Belden said China has not yet recovered from the impact of Covid-19 on oil demand, but fuel consumption in South and Southeast Asia will increase as regulations are relaxed. He said he was recovering significantly.

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