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When can we expect light distillate(gasoline) cracks to rebound?

Seong Hee Lee in Oil (General)

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Seong Hee Lee    + 1

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Well the current situation can be summarized as refining margins for light distillates taking a big hit because of high stock levels globally. 

The main reasons for the high stock levels are

1. Crude slate becoming lighter due to increase in US production.

2. Refineries’ running at high levels supported by middle distillate and residual fuel refining margins.

Current weakness in light distillate refining margins just doesn’t seem sustainable. Gasoline cheaper than Fuel oil is just not right. Yes, the market will correct itself sometime in the future when refineries cut runs to produce less gasoline, but when do you think this will happen? 

 

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