Too much light

摘要

Something out of the ordinary is happening in the oil market this quarter. Gasoline margins have plummeted in all regions, while fuel oil prices have risen as supplies tighten, leaving gasoline in Singapore at a discount to fuel oil. Even at a time of year when gasoline demand is moving into a seasonal dip, the swing in light-heavy product differentials has taken the market by surprise. Gasoline demand has flatlined this year, in contrast to distillate demand, which is soaring after two years of vibrant global economic growth. Distillate inventories look low at a time when they usually build going into winter. Refiners worldwide have been operating at high utilisation rates to supply the diesel that the market needs. But high runs have produced surplus gasoline, squeezing margins and boosting light distillate stocks. Producing gasoline is no longer profitable. Margins in Europe and Asia-Pacific briefly turned negative for the first time in seven years as supplies outstripped demand.