Refining margins for sweet crudes are out-performing margins for sour crudes like Urals in Northwest Europe, Platts data shows, as lighter refined products have surged while heavier products have dropped.
While cracking margins -- which measure the difference between the Amsterdam-Rotterdam-Antwerp delivered pot price and Northwest European refinery crack yields -- have climbed for all grades in Northwest Europe, the difference between sweets and sours has remained persistently wide.
On Tuesday, the cracking margin for Russia's sour Urals crude grade was calculated at plus $4.035/b, its highest level since at least May 2013 when Platts began calculating the grade's cracking yield.
North Sea's Ekofisk was calculated at plus $4.245/b on Tuesday, while Brent was calculated at plus $4.775/b. The cracking margin for Norway's Oseberg was valued at plus $5.665/b.
Traders said support for North Sea crudes has been driven by the recent strength in clean product markets, particularly gasoline and naphtha, where prices have been buoyed by the upcoming US driving season.
"Margins did get better," one refiner said. "It was especially on the lighter side, led by gasoline and naphtha."
Gasoline cracks in particular have surged ahead of the driving season in the US where stocks for the road fuel have been unusually low.
On Tuesday, the Eurobob gasoline crack swap, which measures the relative value of a product versus the input cost of crude, was assessed at $14.50/b, its highest since July 19, 2013.
"We're still seeing sweet crudes at a relatively better value to Urals," a trading source said. "Plus fuel oil came off a lot, diminishing the value of [the yield]."
Urals, as a heavier, sourer crude grade, has a strong fuel oil yield, and high sulfur fuel oil has weakened over the last week.
The European high sulfur fuel oil crack spread fell $2.12/b between Monday and Thursday last week, bouncing off a two-month low on Wednesday. Traders said that closed arbitrage to Asia, one of the main outlets for European-produced fuel oil, has kept HSFO prices under pressure since early April.
