Cracks for gasoline have pushed above those for gasoil in Europe in a rare display of end-of-summer strength, Platts data shows, as gasoil remains unseasonably weak on poor demand for heating oil.
On Friday, physical gasoline cracks, which measure the price performance of physical barges against Dated Brent crude, were valued at $19.57/barrel, nearly $1/b higher than the physical Rotterdam 0.1% gasoil barge crack at $18.61/b.
Both gasoline and gasoil are seasonal fuels, with demand for gasoline peaking during the US summer driving season, while heating oil traditionally strengthens in the autumn.
"There is almost no heating oil demand," a Swiss supplier said, pointing to weak demand for the fuel across Europe.
Much of the 0.1% gasoil market in Northwest Europe faces a radically different future, as the bedrock heating oil demand from countries such as Germany -- the traditional bastion of gasoil demand -- have been eroded by moves to lower sulfur heating oils.
In light of this, higher sulfur 0.1% gasoils have sought new homes in export markets, fundamentally undermining the typically dependable end-of-summer seasonal demand pattern.
This is the sixth time so far in 2012 that gasoline cracks have pushed past gasoil, as a refinery closures, weather concerns, and rising emerging market demand have boosted buying for the road fuel while constricting supply.
An extensive refinery maintenance season across Northwest Europe this autumn could further boost the European gasoline market, sources said.
"It's going to make it strong," another gasoline trader said of the upcoming maintenance schedule in Europe, which could see several large producers going in to full or partial shutdowns.
"But that strength is already in the gasoline price," the trader added.
Physical gasoline cracks have shot up $7.05/b between August 1 and August 31, Platts data shows, closing out the month within sight of record highs, even as the summer driving season draws to a close.
Over the same time-frame, the 0.1% gasoil barge crack has risen from $17.17/b, to $19.44/b, Platts data shows.
The average gasoline crack in August 2011 was $9.11/b, while the average gasoil crack was just over $15/b.
"Gasoline used to be the ugly sister of [gasoil]," a gasoline trader said. "Now it's quite a nice looking sister."
