After growing by 60,000 b/d year-on-year to an average of 180,000 b/d in the first half of 2018, the U.S.’ exportable gasoline surplus is expected to continue expanding through 2019. This growing surplus will be bearish for the Atlantic Basin gasoline markets and exert downward pressure on spreads to crude as Latin America’s import requirement shrinks and U.S. exporters compete more intensely with European producers to place volumes within the region.
In the first quarter of 2018, European net exports of finished gasoline and blending components averaged nearly 1.4 million b/d. As Europe’s exportable surplus shrinks, import requirements especially East of Suez narrow, and competition to place gasoline in the Atlantic Basin intensifies due to growing U.S. and Russian surpluses, European exports will fall by more than 100,000 b/d over the next year.
East Coast drivers could be putting Russian gasoline into their fuel tanks without even knowing it. Already strong imports of blending components like naphtha will be paired with gasoline after Soviet refining tax breaks and investments give Russia surplus fuel to sell. Exports into Europe and the U.S. Atlantic basins will rise by 75,000 barrels a day, Energy Security Analysis, Inc. principal Andrew Reed says.