ANALYSIS: Refiners' profits on gasoline could rise in coming months

By JENNY GROSS

LONDON -- Refiners that produce gasoline can make more money per barrel now than they could at any point in the last two years, and analysts said this week that the product could become even more profitable in the coming months as the US enters its peak summer driving season.

A string of refinery closures on the US East Coast has left a gap in the market and this could provide support for prices to go higher, analysts said.

The current price spike was partly due to the switching to summer grades from winter grades by refineries, Olivier Jakob, managing director of Swiss consultancy Petromatrix, said.

"Right now, the overall stock situation in the US doesn't seem catastrophic, but when the Sunoco refinery goes down, it will be difficult to meet demand," Jakob said.

Sunoco will shut its Philadelphia refinery, which produces 335,000 bpd, in July if it can't sell it and exit the business.

Since September, ConocoPhillips shut its 185,000 bpd Trainer, Pa., refinery and Sunoco closed its 178,000 bpd Marcus Hook, Pa., refinery.

Those refineries, plus the Sunoco Philadelphia plant, make up 50% of East Coast refining capacity.

European gasoline cracks, a measure of profit by refiners, Wednesday hit $16.47/bbl, their highest level in at least two years, according to data from Marex Spectron, a financial products broker in the commodities sector.

"The US arbitrage looks closed for now, so if demand kicks in and the US starts pulling again, and on top of that we face a heavy driving season and a hurricane it will get really nasty," a Europe-based gasoline trader said.

Hurricanes in the US can cause refineries to shut until they blow over.

The US is the world's largest gasoline consumer and European prices rely heavily on demand fluctuations there.


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