rongsheng refinery start quotation

SINGAPORE, Oct 14 (Reuters) - Rongsheng Petrochemical, the trading arm of Chinese private refiner Zhejiang Petrochemical, has bought at least 5 million barrels of crude for delivery in December and January next year in preparation for starting a new crude unit by year-end, five trade sources said on Wednesday.

Rongsheng bought at least 3.5 million barrels of Upper Zakum crude from the United Arab Emirates and 1.5 million barrels of al-Shaheen crude from Qatar via a tender that closed on Tuesday, the sources said.

Rongsheng’s purchase helped absorbed some of the unsold supplies from last month as the company did not purchase any spot crude in past two months, the sources said.

Zhejiang Petrochemical plans to start trial runs at one of two new crude distillation units (CDUs) in the second phase of its refinery-petrochemical complex in east China’s Zhoushan by the end of this year, a company official told Reuters. Each CDU has a capacity of 200,000 barrels per day (bpd).

Zhejiang Petrochemical started up the first phase of its complex which includes a 400,000-bpd refinery and a 1.2 million tonne-per-year ethylene plant at the end of 2019. (Reporting by Florence Tan and Chen Aizhu, editing by Louise Heavens and Christian Schmollinger)

In a move to encourage higher refinery production to help a struggling economy, authorities earlier this month issued a small portion of the first-batch crude oil import quotas for 2023, months ahead of the usual timeline.

2021 marked the start of the central government’s latest effort to consolidate and tighten supervision over the refining sector and to cap China’s overall refining capacity.[14] Besides imposing a hefty tax on imports of blending fuels, Beijing has instituted stricter tax and environmental enforcement[15] measures including: performing refinery audits and inspections;[16] conducting investigations of alleged irregular activities such as tax evasion and illegal resale of crude oil imports;[17] and imposing tighter quotas for oil product exports as China’s decarbonization efforts advance.[18]

Yet, of the three most recent major additions to China’s greenfield refinery landscape, none are in Shandong province, home to a little over half the country’s independent refining capacity. Hengli’s Changxing integrated petrochemical complex is situated in Liaoning, Zhejiang’s (ZPC) Zhoushan facility in Zhejiang, and Shenghong’s Lianyungang plant in Jiangsu.[21]

As China’s independent oil refining hub, Shandong is the bellwether for the rationalization of the country’s refinery sector. Over the years, Shandong’s teapots benefited from favorable policies such as access to cheap land and support from a local government that grew reliant on the industry for jobs and contributions to economic growth.[22] For this reason, Shandong officials had resisted strictly implementing Beijing’s directives to cull teapot refiners and turned a blind eye to practices that ensured their survival.

But with the start-up of advanced liquids-to-chemicals complexes in neighboring provinces, Shandong’s competitiveness has diminished.[23] And with pressure mounting to find new drivers for the provincial economy, Shandong officials have put in play a plan aimed at shuttering smaller capacity plants and thus clearing the way for a large-scale private sector-led refining and petrochemical complex on Yulong Island, whose construction is well underway.[24] They have also been developing compensation and worker relocation packages to cushion the impact of planned plant closures, while obtaining letters of guarantee from independent refiners pledging that they will neither resell their crude import quotas nor try to purchase such allocations.[25]

In 2016, during the period of frenzied post-licensing crude oil importing by Chinese independents, Saudi Arabia began targeting teapots on the spot market, as did Kuwait. Iran also joined the fray, with the National Iranian Oil Company (NIOC) operating through an independent trader Trafigura to sell cargoes to Chinese independents.[27] Since then, the coming online of major new greenfield refineries such as Rongsheng ZPC and Hengli Changxing, and Shenghong, which are designed to operate using medium-sour crude, have led Middle East producers to pursue long-term supply contracts with private Chinese refiners. In 2021, the combined share of crude shipments from Saudi Arabia, UAE, Oman, and Kuwait to China’s independent refiners accounted for 32.5%, an increase of more than 8% over the previous year.[28] This is a trend that Beijing seems intent on supporting, as some bigger, more sophisticated private refiners whose business strategy aligns with President Xi’s vision have started to receive tax benefits or permissions to import larger volumes of crude directly from major producers such as Saudi Arabia.[29]

The shift in Saudi Aramco’s market strategy to focus on customer diversification has paid off in the form of valuable supply relationships with Chinese independents. And Aramco’s efforts to expand its presence in the Chinese refining market and lock in demand have dovetailed neatly with the development of China’s new greenfield refineries.[30] Over the past several years, Aramco has collaborated with both state-owned and independent refiners to develop integrated liquids-to-chemicals complexes in China. In 2018, following on the heels of an oil supply agreement, Aramco purchased a 9% stake in ZPC’s Zhoushan integrated refinery. In March of this year, Saudi Aramco and its joint venture partners, NORINCO Group and Panjin Sincen, made a final investment decision (FID) to develop a major liquids-to-chemicals facility in northeast China.[31] Also in March, Aramco and state-owned Sinopec agreed to conduct a feasibility study aimed at assessing capacity expansion of the Fujian Refining and Petrochemical Co. Ltd.’s integrated refining and chemical production complex.[32]

State oil giant Saudi Aramco signed an agreement on Thursday to invest in a refinery-petrochemical project in eastern China, part of its strategy to expand in downstream operations globally.

The memorandum of understanding between the company and Zhejiang province included plans to invest in a new refinery and co-operate in crude oil supply, storage and trading, according to details released by the Zhoushan government after a signing ceremony in the city south of Shanghai.

Zhejiang Petrochemical, 51 percent owned by textile giant Zhejiang Rongsheng Holding Group, is building a 400,000-barrels-per-day refinery and associated petrochemical facilities that was expected to start operations by the end of this year.

Aramco also owns part of the Fujian refinery-petrochemical plant with Sinopec and Exxon Mobil Corp, and has plans to build a 300,000-bpd refinery with China’s Norinco. It is also in talks with PetroChina to invest in a refinery in Yunnan.

China concentrates most of the refinery projects scheduled to start operation between 2022 and 2023 in the Asian and Middle East region. In terms of refining capacity, Kuwait"s Al Zour refinery is estimated to be the largest project, at 615,000 barrels per day. This is followed by the Jieyang and Rongsheng refineries, both located in China and each with a refining capacity of 400 thousand barrels daily. Meanwhile, the refining capacity worldwide is forecast to expand by one million barrels per day in 2022, with an additional expansion of 1.6 million barrels daily in the following year.Read moreRefining projects scheduled to begin operation in Asia and the Middle East in 2022 and 2023, by refining capacity(in 1,000 barrels per day)CharacteristicRefining capacity in thousand barrels per day--

Saudi Aramco is reportedly set to sign an agreement to purchase a stake in a refinery and petrochemical project in eastern China. Aramco"s senior vice-president of downstream, Abdulaziz al-Judaimi, has been quoted in media reports as saying that the Saudi energy giant is set to invest in the Zhejiang project in eastern China.

The Zhejiang Petrochemical Company, 51 per cent owned by Chinese textile major Rongsheng Holding Group, plans to start its 400,000 barrels a day (b/d) refinery, which is integrated with a petrochemical plant in the eastern province of Zhejiang, in late 2018.

Last month, Aramco signed a long-term deal with Rongsheng to supply about 170,000 b/d crude oil for the project, to be located in the port city of Zhoushan.

Aramco also owns part of the Fujian integrated refinery and petrochemical complex with Sinopec and Exxon Mobil Corp, and has plans to build a 300,000 b/d refinery with China’s Norinco.

The first crude carrier supplying the upcoming Zhejiang complex should arrive in December or January, depending on when the project starts, Al-Judaimi has been quoted as saying.

Bloomberg quoted another industry executive as saying that the economic decline that gripped China earlier this year amid the lockdowns is now over and refining rates are on the rise. Gasoline consumption has also picked up and will lead the rebound in fuel demand, Chen Hongbing, deputy general manager at Rongsheng Petrochemical said at the industry event.

The newly-built highly-integrated mega Chinese refinery-cum-petrochemical complexes are immensely more efficient than the 50-60 year-old clunkers that they are replacing across the globe spanning from the U.S. west coast to the Philippines, bringing a new paradigm to the oil market, they said.

So far in Asia, Royal Dutch Shell announced the closure of its 60-year-old 110,000 b/d Tabangao refinery in the Philippines and plans to cut capacity by half at its biggest 500,000 b/d facility in Singapore. Shell said it aims to have just six integrated refineries by 2025.

BP Australia earlier said it would convert its 152,000 b/d Kwinana refinery in Western Australia into an import terminal. Ampol said Oct. 8 it is studying a similar conversion of its 109,000 b/d Lytton site, echoing a statement by Refining NZ, the sole operator in New Zealand. The Australian government last month announced plans to subsidize refiners as long as they maintain operations in Australia, days after Viva said it may shut the 120,000 b/d Geelong site.

One of the export quota recipient, Zhejiang Petrochemical Corp. (ZPC) was given 1 million mt. The company, which is majority owned by Rongsheng Petrochemical Co., is in the final stages of getting the second phase of its 800,000 b/d refinery up and running.

"It is good news, although the requirement of very low-temperature storage could pose a logistical challenge. This could be the start of the series of new vaccinations under development. These vaccines will help accelerate the fuel demand recovery," said Premasish Das, IHS Markit research and analysis director.

Mobility curbs delayed the commissioning of new plants while supply of propylene from refinery sources was curtailed as refiners cut runs, according to Asia Light Olefins World Analysis - Propylene.

A bumper 10 million-barrel spot crude oil purchase by Rongsheng Petrochemical suggests it is keen to get the second phase of its massive 40 million mt/yr, or 800,000 b/d, refinery and chemical project at subsidiary Zhejiang Petrochemical Co. Ltd (ZPC) running in the coming months, trading sources said.

Rongsheng announced in August plans to begin trial runs at the second 400,000 b/d tranche of the project in the fourth quarter of 2020 and looks set to achieve this aim despite COVID-19-related construction delays due to social distancing restrictions earlier in the year.

Market participants said Rongsheng was absent from the spot market for a couple of months and returned this week to buy the medium-sour Middle East cargoes, which led some to believe it was restocking but added that the scale of the purchase does point to some use in the new facility.

"Under normal conditions it would take at least another 4-6 months before they can get the entire plant ready for normal operation, but we can"t exclude the possibility that they may choose to partially startup Phase II in order to meet their stated goal of a 2020 Q4 startup," Feng said on Friday.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with the OPIS Asia Naphtha & LPG Report.

Continuing low refinery runs coupled with the autumnal turnaround season has tightened supplies from across the European barrel since September, creating backwardation in naphtha and gasoline and causing middle distillate differentials to strengthen versus distillate futures, according to OPIS and Intercontinental Exchange pricing.

At the start of September, the November regrade was trading at minus $5.10/bbl, with Singapore FOB jet paper trading the equivalent of around $18.50/mt below Singapore FOB 10ppm sulfur gasoil paper. By the end of the month, the November regrade had bounced higher to minus $3.08/bbl, while FOB jet paper narrowed to just $5/mt below Singapore FOB 10ppm sulfur gasoil, a contraction of $13.50/mt over the month.

But the volatility and liquidity of jet paper raises uncertainty over whether the rally in both the Asian regrade and European paper will hold over the winter. Trading was very thin for Q4 and Q1 jet paper to begin with, although it has started to recover, according to jet fuel traders.

Refinery runs at the world"s third largest crude oil importer are forecast to increase to 90% in November from around 80-85% in October with further hikes anticipated in December, with one source adding that it could reach 100% due to the combination of renewed diesel and strong gasoline demand.

India reduced refinery throughput in August to 16.1 million mt, or 3.82 million b/d, down a hefty 26.4% from a year ago, according to data from the Petroleum Planning & Analysis Cell (PPAC). This works out to 76% of the country"s nameplate 5.02 million b/d capacity and 73.6% of the 5.19 million b/d processed a year ago, the data showed.

There are no major refinery turnarounds planned in the fourth quarter aside from the month-long shutdown of the 400,000 b/d Vadinar facility in October.

But the latest colder weather forecast may have already started to turn the tide, a Japanese trader said, citing the emergence of three Japanese utilities in the spot market last week for October and November cargoes.

Egypt"s Middle East Oil Refinery (MIDOR) company, located in Alexandria, has issued a tender to buy 90,000 metric tons of gasoil for October and November delivered into El Dekheila Port, according to a document seen by OPIS amid better-than-expected recovery in the region.

"We started to see some recovery in July/August and recent tenders from MIDOR and Egyptian General Petroleum Corporation (EGPC) are reflecting the recovery, but demand is still lower than last year at this time," said Farrah Boularas, an associate director with IHS Markit Downstream.

MIDOR delivers refined products to the national oil company, EGPC, and the local market. Its refinery has a crude distillation capacity of 100,000 b/d and is one of the newest and most sophisticated of Egypt"s nine operating refineries, according to IHS Markit data. Egypt has a total atmospheric distillation capacity of 737,000 b/d.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with the OPIS Asia Naphtha & LPG Report.

The shutdown of the petchems facility in Scotland is planned to last between five and six weeks, those local sources say, and has been pushed back from a provisional mid-September start date.

Turnarounds at the nearby 210,000-b/d Petronineos-operated refinery and the petchem plant were originally scheduled for April this year, but the onset of the COVID-19 pandemic scotched those plans.

One source told OPIS that a short period of maintenance work on a 110,000-b/d crude distillation unit at the refinery was about to end, and so many workers engaged in that project will be redeployed to work on the forthcoming petchems plant shutdown.

India, the second-largest crude oil importer in Asia, reduced refinery throughput in August to 16.1 million mt, or 3.82 million b/d, down a hefty 26.4% from a year ago, according to data from the Petroleum Planning & Analysis Cell (PPAC). This works out to 76% of the country"s nameplate 5.02 million b/d capacity and 73.6% of the 5.19 b/d processed a year ago, the data showed.

"We expect the demand recovery to continue and that would support higher refinery runs in October/November. However, from a year-on-year point of view, there is still a long a way to go to reach the 2019 level," said Premasish Das, IHS Markit research and analysis director.

IHS Markit estimates September refinery runs at 4.1 million b/d, rising to 4.4 million b/d in October/November, Das said, adding that the forecast may be slightly on the optimistic side.

Major Indian refiners such as IOC and Reliance Industries have in the past month restarted large facilities at Panipat and Jamnagar, respectively, which should raise crude throughput going forward, the sources said.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with the OPIS Asia Naphtha & LPG Report.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with the OPIS Asia Naphtha & LPG Report.

Aramco set in end-Aug. its September Contract Price (CP) for propane at $360/mt, unchanged from August and butane at $355/mt, up $10/mt on-month, as term discussions for next year got started. No cancellations of term cargoes were reported for September.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with the OPIS Asia Naphtha & LPG Report.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with the OPIS Asia Naphtha & LPG Report.

Naphtha usage as petrochemical feedstock was crimped by poor aromatics margins as downstream polyester and other derivative demand started to slow down in the face of the prolonged economic downturn wreaked by COVID-19. However, consumption in China for use in olefin production remains robust, a source said.

“For the rest of the year we do not expect so much crude imports, fresh arrivals have already started to decline. The storage economics have worsened and there are high demurrage costs,” said Sophie Fenglei Shi, downstream research associate director at IHS Markit in Beijing. OPIS is an IHS Markit company.

Demand in India will increase as two massive crude units, the Indian Oil Corp. 300,000 b/d Paradip refinery and a 380,000 b/d unit at the mega Reliance Industries Jamnagar site begin operations after around a three-week maintenance.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with the OPIS Asia Naphtha & LPG Report.

Sinopec restarted its 460,000 b/d Zhenhai Refining & Chemical Co. site in July after a four-month maintenance and its 250,000 b/d Tianjin facility after a two-month turnaround, leading to the higher output.

Naphtha buyers including Yeochon NCC (YNCC) and LG Chem paid higher premiums for their 2021 CFR term purchases than this year as the startup of a wave of new crackers in the coming months and next year shaped views of a tighter supply outlook, market participants said.

Asia naphtha demand as a petrochemical feedstock will continue to grow as new crackers begin operations even as below-capacity refinery utilization rates in some countries squeeze supply further, they said.

In addition, Lotte Chemical plans to restart its fire-hit Daesan cracker by end 2020, the company said earlier this month, adding it plans to diversify feedstocks and will more than double its use of liquefied petroleum gas (LPG) in three years.

Refinery run rates in Asia and the Middle East are expected to improve to 74% this month and reach 82% by January 2021, from below 70% in April during the depth of coronavirus disease 2019 (COVID-19) lockdowns, said April Tan, IHS Markit associate director in Singapore.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

A Royal Dutch Shell refinery in the Philippines became the first Asian casualty of the fuel demand destroying coronavirus disease 2019 (COVID-19) pandemic as other sites in the region brace themselves for similar fallouts in the face of new virus outbreaks and poor refining margins while more sites come onstream in China.

Pilipinas Shell Petroleum Corp said on Thursday that its near 60-year-old 110,000 b/d Tabangao refinery in Batangas province was no longer economically viable and would be turned into an import terminal.

“Due to the impact of the COVID-19 pandemic on the global, regional and local economies, and the oil supply-demand imbalance in the region, it is no longer economically viable for us to run the refinery,” Pilipinas Shell President and CEO Cesar Romero said in the statement.

Refining margins in Asia are under tremendous pressure due to the sharp drop in fuel demand with the benchmark Singapore complex gross margin dropping to minus $3.78/bbl in May/June, according to an update by Refining NZ, which is studying the possibility of converting its refinery in New Zealand to an import terminal.

“This is not a surprise. We are working on a list of refineries in Asia that are vulnerable because of COVID-19 and this refinery keeps coming up in many of the criteria,”said Premasish Das, IHS Markit downstream research and analysis director, adding that there are sites in Japan, Australia, New Zealand and even in Singapore that face uncertain futures.

RIL brought forward the turnaround of a 380,000 b/d CDU at the export-oriented 705,200 b/d Jamnagar refinery to this week from the initial schedule of Oct. 15, according to sources. The works were expected to finish in three to four weeks.

"It should not come as a surprise given that Sinopec restarted two of its biggest refineries recently," a trader with knowledge of the Chinese market said.

Sinopec restarted its 460,000 b/d Zhenhai Refining & Chemical Co. site after about a four-month maintenance and its 250,000 b/d Tianjin facility after a two-month turnaround, as reported previously.

U.S. refined product output capacity that has been chasing significantly weaker demand since April due to the economic fallout of coronavirus disease 2019 (COVID-19) is about to lose another refinery to temporary shutdown, market sources report.

Another market participant, citing a published report, attributed the idling to low product demand and suggested that restart of the plant would depend on an increase in that demand.

When operating at or near full capacity, the Calcasieu refinery supplies a considerable amount of heavy naphtha and low-sulfur vacuum gasoil (LSVGO) into the U.S. Gulf Coast spot market. Figures from the U.S. Energy Information Administration show the refinery as having 36,000 b/d of vacuum distillation capacity (hence the VGO output) but nothing in the way of fluid catalytic cracking (FCC) capacity or catalytic reforming capacity.

A testament to the Calcasieu refinery"s length on intermediate feedstocks is the fact that Calcasieu-quality LSVGO and Calcasieu-quality heavy naphtha were both seen on offer in the U.S. Gulf Coast spot market last week.

Other U.S. refineries shelved during the pandemic are Marathon Petroleum"s 166,000-b/d plant in Martinez, Calif., and its 28,000-b/d refinery in Gallup, N.M. (both in April). As reported by OPIS on June 16, restart of at least the Martinez refinery is not likely in 2020, according to some large unbranded wholesale customers who were privately informed by company sales executives.

Another U.S. refinery -- HollyFrontier"s 52,000-b/d refinery in Cheyenne, Wyo. -- is also soon to exit the petroleum-processing business. As previously reported, the refinery is expected to halt refining operations by Aug. 1 in order to begin the process of converting the facility to renewable diesel production by the first quarter of 2022.

Lower refinery utilization and the COVID-inspired drop in U.S. demand have also dismissed octane worries for the moment. The best means of addressing tough Tier 3 sulfur standards this year would have required running catalytic reformers at very high rates, and that might have limited output of high- octane components. But the lowest refinery runs of the 21st century have left plenty of spare capacity in refining complexes and kept octane spreads in check.

U.S. refinery utilization has averaged less than 83% of capacity for 15 weeks, including a number of plants at minimum rates or idled (Marathon Petroleum"s refineries in Martinez, Calif., and Gallup, N.M).

Amid a recent spate of processing unit restarts following idling, reduced runs and some planned maintenance, the analysts question refiners" ability to increase throughputs at their plants.

Flaring occurred Tuesday at the Shell-operated 404,000-b/d Pernis refinery near Rotterdam in the Netherlands, according to eyewitnesses, with market sources saying Europe"s largest plant is becoming fully operational after a turnaround.

The trader had previously suggested that some units at Pernis, including those maximising the refinery"s middle distillates production, would not be operational until the middle of July, even though other units came back online last month.

ICE Brent crude, which started trading at the start of the year at just under $70/bbl saw the bottom fall out in March when the OPEC+ producer group failed to agree on an output cut. Brent tumbled to a low of $22.71/bbl in end-March after Saudi Arabia and other Middle East producers opened their oil taps and slashed prices.

The purchases well exceed Chinese refinery runs, especially in the second quarter when the nation was in the grip of COVID-19, leading most participants to agree that a lot of the oil has gone into storage, the capacity of which many had underestimated, according to Feng.

However, shipments have picked in July as seen in recent shipping fixture reports but are still well short of typical levels due to COVID-19, which may lead to reduced refinery runs resulting in a longer period of lower imports, trading sources said.

The slide in consumption actually started on Independence Day and is hardly unprecedented since most consumers have reached their destinations and don"t tend to travel far on the Fourth of July holiday. But even before that slide, some states impacted by rising COVID-19 cases were beginning to trend lower.

A South Korean trader issued two term buy tenders for 23,000 mt butane per month for delivery to Yeosu over three or six month starting from September or October.

Mitsubishi Chemical, Maruzen Petrochemical and Mitsui Chemicals are on track to restart their crackers over the next two weeks after completing scheduled maintenance works, as reported earlier.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

The freeing up of tankers from earlier use as floating storage at the start of COVID-19 lockdowns, along with below-capacity refinery utilization, curtailed liquidity in oil product trades and led to the slump in freight, he added.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

After a slight drop on June 23, the bottom fell out the next day, to 33.5cts/gal and then down to the current level. Prices have started to recover over the last few trading days of the month. In early trading Tuesday, the range was up to 28-30cts/gal. This may be a signal for an even bigger jump forward once the calendar turns to July.

Ethane prices will be driven higher by increasing outright natural gas prices due to the loss of associated gas production and the need to drill for gas from drier fields. Demand will be flattish in 2020 before recovering through to 2025 on growing US petrochemical consumption and boosted by new export capacity to start up at the end of the year.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

CPC Corp. is seeking gasoline in a surprise move following the closure of a 50,000 b/d residue fluid catalytic cracker (RFCC) at its Taoyuan refinery in Taiwan for turnaround amid growing demand as governments relax lockdown measures to curb the coronavirus disease 2019 (COVID-19).

The tender came as CPC Corp. shut the RFCC at its 200,000 b/d Taoyuan refinery on May 7 for maintenance works that are expected to last until around Aug. 20, as reported earlier.

"We may see some demand from countries where refinery runs were slashed. They have not raised runs fast enough yet to meet demand recovery," the trader said.

Crude prices recovered with front-month ICE Brent holding above $40/bbl since June 16 as the OPEC+ group extended their supply cut agreement into July and countries eased lockdown measures in an effort to kick-start their economies.

Supply of all naphtha grades tightened because of lower global refinery runs due to fuel demand loss stemming from coronavirus disease 2019 (COVID-19) mobility restrictions. At the same time, resilient petrochemical demand has kept Asia cracker run rates at more than 85% in recent months, widening the supply shortfall, they said.

"Asia was awash with arbitrage barrels in May and June because there was no gasoline blending demand. Now gasoline demand has returned, cracker demand is still there, but refinery runs are recovering at a slow pace because middle distillate margins remain weak," said a northeast Asian buyer.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

HSFO is also in demand in the textile industry for running steam boilers in the dyeing, drying and heating processes, which has also resumed manufacturing as the government looked to kick-start its economy.

Global commodities trader Gunvor is mothballing its 107,500-b/d Antwerp refinery in Belgium following the cratering of European refining margins during the coronavirus disease 2019 (COVID-19) pandemic, the company"s CEO Torbjorn Tornqvist has announced.

Gunvor"s Antwerp refinery has a much lower potential output than several other refineries in Europe"s key Amsterdam-Rotterdam-Antwerp refining hub, and its size is one of several factors adversely affecting its strength, IHS Markit refining and marketing consulting director Hedi Grati told OPIS.

"Gunvor"s refinery in Antwerp is smaller and less complex than its peers in the port and across the border in nearby Rotterdam. Additionally, there is less integration with marketing activities such as fuels retail, which would otherwise provide some more security of demand," said Grati.

"The continued strength of Urals crude, at a premium to dated Brent, must have seriously weighed on the refinery"s bottom line," Grati added. The refinery was designed to process medium-sulfur crude oil, such as the Urals grade.

The restart of the 300,000 b/d Petronas-Saudi Aramco joint venture Pengerang Refining and Petrochemical (PRefChem) facility after an explosion was pushed back due to manpower issues leading to the sale of several million barrels of crude oil that were in floating storage, trading sources said.

The refinery, in the southern Malaysian Johor state, was shut after a massive fire and explosion on March 15 that killed five people. The incident, the second in a year, occurred at a Diesel Hydro Treating Unit (DHT), the company said in a March 16 statement.

The refinery was saddled with issues since it began production last year. In April 2019, another massive fire and explosion almost completely destroyed an atmospheric residue desulphurizer (ARDS), crippling operations as the site was no longer able to process intended sour crudes.

Consequently, the refinery as a whole, and the RFCC in particular, was running at very low rates, market sources said. The fire-hit ARDS was due to restart in the middle of this year, Petronas said in a quarterly report.

The refinery is designed to produce 98,000 b/d of gasoline, 28,000 b/d of jet fuel, 88,000 b/d of diesel, 5,000 b/d of fuel oil and 458,000 mt/year of slurry sulfur. Its gasoline and diesel meet Euro 5 specifications.

The refinery also provides feedstock to an integrated petrochemical complex with a nameplate capacity of 3.3 million mt/year. The cracker has a capacity to produce 1.26 million mt/year of ethylene, 600,000 mt/year of propylene and 180,000 mt/year of butadiene, according to IHS Markit data.

Propane"s discount to CIF NWE naphtha deepened for July, ending at minus $46/t mid-week, from minus $8/t at the start of June, according to the data in the OPIS Europe LPG & Naphtha Report. Early-June bidding for CIF ARA propane by a petrochemical major in NW Europe had continually pitched buyside levels between $10 and $15/mt deeper when compared to propane/naphtha spreads at the time.

California refined products margins are better than they were when Marathon temporarily idled its 161,000-b/d Martinez refinery in April, but fuel demand has not improved to where a restart of the complex is likely in 2020, sources said.

Some large unbranded wholesale customers told OPIS that they have been privately informed by Martinez sales executives that a restart in 2020 appears out of the question. But the Bay Area refinery is not a candidate for permanent closure, given its complexity and the eventual return of demand for transportation fuel in a post-coronavirus disease 2019 (COVID-19) environment.

A Marathon spokesperson declined to comment on Martinez refinery operations in the rest of 2020, emphasizing that top brass was constantly evaluating conditions with an intent to restart when "demand warrants."

Some traders have said a restart would send spot prices sharply lower for CARBOB, CARB diesel and jet fuel. San Francisco CARBOB fetched an average price of around $1.30/gal in the spot market last week, representing modest basis premiums of 7.5-16.5cts/gal to the NYMEX RBOB contract. S.F. CARB diesel spot prices averaged about $1.17/gal, or a nominal 3.5-4.25cts/gal over the ULSD futures contract.

In comparison, the five-year average of mid-June weekly prices for S.F. CARBOB and S.F. CARB diesel between 2015 and 2019 was $1.85/gal and $1.82/gal, respectively, according to OPIS historical spot pricing data. Even so, Northern California current market values are about 62cts/gal stronger than when the Martinez refinery was idled on April 27.

Bringing back a 161,000-b/d refinery might tighten up the crude market but could tilt gasoline back into the "sloppy" category that prevailed for the first part of 2020.

The U.S. West Coast PADD5 region represents perhaps the most disciplined refining area of the country. Before the COVID-19-inspired demand destruction, refiners were operating at about 87% of capacity, according to statistics compiled by the U.S. Energy Information Administration (EIA). Regional run cuts and the idling of Martinez pulled refinery utilization rates to just above 61% of capacity for the week ending June 5, according to EIA. A cursory glance at other regions finds the East Coast with a lower rate of 51.3%, but that"s only because the closed-for-good Philadelphia Energy Solutions refinery"s 336,000-b/d is still counted in the base capacity. PADDs 2, 3 and 4 have seen refinery runs rebound to over 75% utilization.

The Martinez refinery could be restarted in relatively short order if demand warranted, with the plant capable of returning to normal operations within two weeks, a spokesperson told OPIS.

Longer term, the refinery is viewed as a keeper, although Marathon might have to make substantial investments in the state in renewable diesel. Refinery experts who have analyzed all of California"s refineries list Valero"s Wilmington plant as the most likely candidate for eventual closure, and they are also keeping an eye on Phillips 66"s coupled plants in Rodeo and Santa Maria.

Marathon"s Martinez plant isn"t the only refinery likely to remain on the shelf for months. The refiner also idled its 26,000-b/d refinery in Gallup, N.M., and a restart there does not appear imminent.

Meanwhile, sources believe that the ex-HOVENSA plant in St. Croix in the U.S. Virgin Islands that was originally expected to run up to 200,000 b/d of crude in early 2020 in January will not be manufacturing gasoline or diesel this summer. There is no word on when the 135,000-b/d Come-by-Chance refinery in Newfoundland will be resurrected by new owner Irving, and a deal to refurbish and restart a 335,000-b/d Curacao refinery by Klesch Group has been delayed by COVID-19. Demand concerns are also the probable rationale behind the delayed target date for the expansion of ExxonMobil"s Beaumont, Texas, refinery from 350,000 b/d to 600,000 b/d.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

The 404,000 b/d Pernis refinery near Rotterdam in the Netherlands, Europe"s largest refinery, is scheduled to come back from its largest turnaround in several years by the end of this month, market sources said today.

Refinery operator Royal Dutch Shell has started offering diesel to load from Pernis before the end of the month, according to two European diesel market sources. Shell is also offering marine gasoil, known as DMA, for loading at Pernis in July, said a marine fuel market source.

The entire refinery with two 200,000-b/d CDUs went offline for a turnaround in the middle of April, and sources in the area said maintenance would last throughout May and June. The refinery is set come back online at a moment when European refining margins remain low but have started to creep up.

Northwest Europe naphtha values strengthened against the refinery complex in April and May, with support coming from higher arbitrage flows to Asia alongside burgeoning petrochemical feedstock demand, while other refined products in Europe saw demand crumple due to the confinement measures brought about by the coronavirus 2019 disease (COVID-19).

Demand recovery and refinery run rates are the two uncertainties trading sources consistently raise when discussing Asian crude oil imports in the coming months and its impact on prices now that the OPEC+ group have got a handle on supply.

However, whether the OSP increase and possible reluctance among term buyers to take full contractual volumes would draw out crude oil currently in storage as part of the contango trading strategy or even flush out clean products on board vessels in place of higher refinery runs is still a big unknown, they said.

There are still about 170 million barrels of crude oil stored on board 171 vessels at the start of June, data from IHS Markit’s Commodities at Sea show. At its peak about a month ago in mid-May more that 240 million barrels were kept on tankers compared with the usual around 60 million barrels when there is no super contango, the data show.

“Although we expect the trough to have been over in April on a monthly basis as regional countries start to ease their containment measures, recovery will be gradual amid change in consumption patterns and fears over a second wave of infections,” it said in the report.

“By how much 2H 2020 imports will pull back depends on refinery runs (which in turn depends on oil demand recovery in domestic and overseas markets) and availability of storage capacity. All these factors are 2020 specific and may not be directly comparable to 2018,” said Feng Xiaonan, IHS Markit analyst in Beijing.

Chinese refinery runs in May were estimated to see more month-on-month improvement to 70% from 55 % in February, according to the IHS Markit China Refining and Marketing Short-Term Outlook report published on May 29.

Refined oil product output in France is rising as demand returns, with the Total-operated Grandpuits refinery coming back online and two ExxonMobil-operated refineries boosting runs.

The 100,000-b/d Grandpuits facility, located near Paris, was initially due back online in March after a month-long maintenance period, but the refinery remained offline due to slumping demand as France undertook its lockdown to combat the coronavirus disease 2019 (COVID-19) pandemic.

ExxonMobil"s 120,000-b/d Fos refinery, based in the south of France, has joined the company"s 233,000-b/d Gravenchon plant in "adapting to the demand" for oil products in the country, where lockdowns are easing and consumption increases, according to a company spokeswoman.

The Gravenchon refinery increased runs last week as the company informed local residents that units were being brought back into operation. ExxonMobil declined to offer figures regarding exact throughput at the refineries.

Total"s 100,000-b/d Feyzin refinery is seeing more worker activity on site but remains offline, local sources said. The French oil major began a big turnaround at Feyzin on February 14, with the work scheduled to last several weeks at a cost of 80 million euros, but maintenance was stopped on March 20 due to the COVID-19 pandemic.

Refinery maintenance scheduled before the COVID-19 pandemic could encourage some operators to boost output, according to IHS Markit principal downstream research analyst Eleanor Budds.

The recovery in driving activity coincided with the end of Mexico"s Safe Distancing Campaign to contain coronavirus disease 2019 (COVID-19), and the start of new normality with restricted economic activity under a traffic light system.

CIF ARA propane prices extended its two-month run holding a premium to CIF NWE naphtha, with propane/naphtha trading at +$53/mt at the start of May, down from a high of +$131/mt recorded on April 21, but still atypical going into the summer months when propane usually trades at a discount due to the lack of heating demand. By comparison, the propane/naphtha spread was minus $139/t in May 2019. A petrochemical producer with feed-flexible coastal facilities in the Netherlands and Spain made repeated propane cargo resale attempts last month.

Premiums for large field-grade CIF NWE butane cargoes over naphtha were less drastic, starting May valued at 106% of CIF NWE naphtha before easing back to 87% by month-end.

Strong naphtha demand, as well as tight supply with lower arbitrage flows and refinery turnarounds, will support prices. CFR Japan on June 3 rose to $343.750/mt, the highest since March 6.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

"It has been assumed that COVID-19"s negative impact on crude and petroleum products demand will begin to decrease by June and normal economic activity will resume starting from August," said Tupras.

Tupras will resume production at its 230,000 b/d Izmir refinery on 1 July, which accounts for 40% of its crude oil processing capacity, the company said in a recent filing posted on the Public Disclosure Platform (KAP) website.

Production stopped temporarily at the refinery on May 5 due to falling demand for oil products amid travel restrictions to prevent the spread of COVID-19, Tupras said.

The Asia gasoline market is expected to strengthen further with its margin poised to turn positive amid tighter supply due to lower Chinese exports and reduced refinery runs just as demand is growing on the back of looser lockdown measures, analysts and traders said.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

The Yulong project has been in the making for years. Last September, details emerged for an 800,000 b/d refinery to be built in two phases with the first 400,000 b/d to be integrated with two 1.5 million mt/year ethylene plants, according to the Shandong provincial and Jilin city governments.

Ten independent refineries, with a combined 560,000 b/d capacity, have so far signed up to swap their existing refining assets into equivalent equity shares in the newly proposed refinery, according to the IHS Markit report.

The provincial government announced on Feb. 11 that it will start work to close down four of the participating refineries in 2020, namely Zhonghai Fine Chemical, Yuhuang Shengshi, Binyang Gasificaiton and Kinshi Bitumen, which have a combined 254,000 b/d processing capacity, the IHS Markit report showed.

"Considering that the COVID-19 outbreak has already put mounting pressure on employment and local economic growth, we believe it is probable for the government to postpone refinery closures in order to maintain stability," they said in the report.

On Tuesday, Reuters news agency reported that the National Development & Reform Commission (NDRC) gave initial approval for the $20 billion project, allowing Shandong province to start planning for construction for around an end 2024 start, citing sources with knowledge of the approval.

In addition, an arbitrage pricing window between ANS and Asian markets has opened since the start of April, with Middle East crudes delivered to Asia trading at an average of $5/bbl above ANS so far in Q2 2020, resulting in three rare cargoes of ANS exported to China between late April and May, Fielden said.

Traffic around the United States continues to climb back toward levels seen before the start of the coronavirus disease 2019 (COVID-19) pandemic but still lags behind what would normally be seen at the start of the busy summer driving season, according to the latest data from research firm Inrix.

Six states -- Wyoming, South Dakota, Montana, Idaho, Alaska and Utah -- have all seen personal traffic increase past where it had been prior to pandemic, while another 16 states are seeing a deficit of less than 10%. Hawaii continues to lag the furthest from February levels, off 49%, while three states are seeing personal traffic off by 30% to 39%. Ten states are 20% to 29% off pre-COVID levels, while 13 are seeing personal travel 11% to 19% behind where it was before the start of lockdowns.

"Consumption of gasoline and diesel rose to about 90% of levels in the previous years, while demand for jet fuel recovered to around 60%," said an official at a major refinery, asking not to be identified.

Last month, SK Energy, the nation"s largest refiner idled its 260,000 b/d No. 5 CDU and other facilities including the 57,000 b/d No.1 residue fluidized catalytic cracker (RFCC) at the 840,000 b/d Ulsan refinery for scheduled turnaround, as reported earlier.

"We may not see a real recovery until international flights increase. Some travel agencies started offering overseas trip programs, but only for trips from August," said the analyst.

Uncertainty continues to hang over the maintenance plans of British refinery operators, who have been juggling the demands of government, low refining margins and the practicalities of undertaking turnarounds during a pandemic.

The tricky calculations facing some U.K. refiners are best embodied by a debate swirling around the 210,000-b/d Petroineos-operated Grangemouth refinery.

The refinery was due to come offline along with the nearby Ineos-operated petchems site in April, but sources in the area said in March that all the works would be postponed amid the onset of the coronavirus disease 2019 (COVID-19) pandemic.

"Because of the coronavirus pandemic and the fact that ethanol is one of the main components of hand sanitizer, it has been kept going," a source withaccess to Grangemouth told OPIS earlier this month. "It"s needing some maintenance," the source said at the start of May. The work was completed within two weeks, the source later said.

The refinery"s financial viability, an issue that has dogged Grangemouth in the past, reared its head again earlier this month, when Petroineos was widely reported by the British media to have applied for an emergency government loan of up to £500 million.

"With people following government advice to stay at home, demand for road and jet fuel has dropped significantly," the company said in a statement reported by IHS Markit, the parent company of OPIS. "As a responsible operator of Scotland"s only refinery, Petroineos is in regular discussion with the Scottish and U.K. governments on a variety of matters."

Asked whether there was concern among the workforce about what would happen to the refinery, one worker representative said: "There are discussions ongoing with the U.K. and Scottish governments. I don"t think there is a huge fear that the refinery is going to shut."

The turnaround plans of Phillips 66, the operator of the 210,000-b/d Humber refinery, which lies on the east English coast, were also nixed by the pandemic.

OPIS revealed in March that a turnaround planned at the refinery for the April-June period had been postponed until September, according to sources in the area.

However, some unit work is ongoing, the operator told OPIS this week when asked if the refinery"s fluid catalytic cracker was offline for maintenance.

"There is planned maintenance work currently underway at the Humber refinery," the company told OPIS in an e-mailed statement. "Details regarding the specific units involved and the duration of the work are considered proprietary."

Sources at Fawley said in March that the U.K. government had insisted to ExxonMobil that it must keep the refinery running "at all costs" during the COVID-19 pandemic, even as refining margins for products such as gasoline entered double-digit negative territory.

The British government has been holding regular conference calls with the refinery"s manager in order to receive updates about the plant"s status, sources at Fawley have told OPIS.

"As a critical sector, workers in the oil and gas industry have continued operations while taking the necessary precautions," a spokesman at the Department for Business, Energy and Industrial Strategy told OPIS. "The government has been engaging with the UK"s oil refinery operators, as well industries across all sectors, during this period."

The maintenance plans of the U.K."s two other large refineries -- the Essar-operated 200,000-b/d Stanlow refinery in northwest England and the Valero-run 220,000-b/d Pembroke plant in Wales -- have been less affected by the pandemic, although runs at the refineries have been reduced.

Essar is not planning a major maintenance at Stanlow until February 2022, OPIS revealed at the start of this year. Sources briefed on the operator"s plans say that rolling individual unit maintenance will instead take place until 2022.

A spokesman for Essar told OPIS this week that the refinery"s fluid catalytic cracker, which boosts gasoline output, came back online in the first half of April. Essar also had second-quarter work penciled in for Stanlow"s hydrofluoric acid and sulfur recover units, sources with familiar with the refinery"s work schedule say.

Last week refinery runs slumped to 56.1% of the nation"s total 3.52 million b/d capacity, the lowest on OPIS records of the Petroleum Association of Japan (PAJ) data going back to January 2014.

“The North Sea barrels that’s been floating for a while will start to clear, some of them will end up in STS (ship-to-ship) operations with the VLCCs that were booked,” said one trading source, adding that resumption of refinery runs in some European countries such as Germany will also aid in the absorption of the regional supply overhang.

Japanese refinery runs fell further last week to the lowest in more than six years even as the government lifted a state of emergency nationwide giving hope to a rebound in oil product demand.

Indian refiners are restarting a slew of crude units that were taken down in the past two months to coincide with demand-sapping coronavirus disease 2019 (COVID-19) lockdown measures that are being wound down leading to a rebound in local fuel consumption, according to market sources and local media.

Nayara Energy restarted a 110,000 b/d unit at Vadinar in late April after a over two-week closure, Bharat Petroleum Corp. Ltd resumed operations at its 100,000 b/d crude unit in Kochi this week following a three-week shutdown, while Mangalore Refinery & Petrochemicals Ltd also did the same after works at a 144,000 b/d unit for about a month, the report showed.

The forward curve of West Texas Intermediate crude futures has significantly flattened on widespread production shut-ins and recovering demand, but the unpredictable path of the coronavirus disease 2019 (COVID-19) pandemic and possible restarts at higher prices baffle analysts as to what the future WTI curve will look like.

The spike in demand growth was matched by an equally impressive rebound in refinery run rates with independents raising output sharply took take advantage of local fuel floor prices that raised margins significantly, according to the report.

Refinery runs in China are expected to increase to 69.8% of capacity in May, according to preliminary estimates from IHS Markit compared with typical rates of around 77% prior to COVID-19. Operations dropped to 55% in February before recovering to 60% and 68.8% in March and April, respectively, IHS Markit data show.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

"We slowed -- that"s how we coped with things," Mosbey said. "We slowed to try to match our production to demand, and cut costs as much as we possibly can and then see how that plays out. Now, we"re starting to feel a little more stable as we start to see demand come back."

As demand for gasoline has risen, Cooper said more ethanol plants are starting to come back online. "So it does seem that we"re starting to see a light at the end of the tunnel, but make no mistake, we still have a very long way to go to climb out of the hole that COVID-19 put us in and by our last count there are still more than 60 ethanol plants that are idle today and close to 75 or 80 facilities that are still operating at greatly reduced output rates."

And we don"t see a way to get ethanol into other countries and start to put it in their gasoline supplies, because it does seem like the writing might be on the wall for electric cars.

Nghi Son Refinery and Petrochemical (NSRP), for example, will not export any spot diesel cargoes in May and June, according to sources with knowledge of the matter.

In the early days of the crisis, in-store sales benefited from "pantry stocking," but merchandise sales declined starting in mid-March due to lower traffic. "Overall, a higher average basket helped offset a portion of the lost customer visits," the company said.

China placed a lot of its crude arrivals in March and April into storage as domestic refinery runs were hurt by the demand erosion caused by COVID-19. But now, it is one of the first countries to emerge from this pandemic and is chalking up impressive domestic fuel demand recovery, apart from jet fuel.

Refinery runs in China are expected to increase to 69.8% of capacity in May, according to preliminary estimates from IHS Markit compared with typical rates of around 77% prior to COVID-19. Operations dropped to 55% in February before recovering to 60% and 68.8% in March and April, respectively, IHS Markit data show.

“We are seeing some traders holding North Sea crude on floaters starting to show them to Asian refiners,” said one source, adding that it was likely that in the coming days some of these would begin their journey East.

Personal travel in the United States is now about 25% off where it was before the start of the coronavirus disease 2019 (COVID-19) outbreak. But even as motorists return to the roads, AAA is forecasting Memorial Day travel will likely hit record lows.

Personal travel rebounded across all states, with four states seeing travel off by less than 10% from the pre-COVID-19 baseline level. Travel in Wyoming remains the least-affected by the COVID-19 outbreak, with levels only 1% off those seen before the start of efforts to contain the pandemic. Two states, Hawaii (51%) and New Jersey (43%) continue to see travel off by more than 40% from the baseline, while 12 states saw the level of travel off by between 30% and 39%. Travel was off between 20% and 29% in 18 states and it was off between 10% and 19% in 14 states.

Memorial Day is considered the unofficial start of the summer season, and driving activity is thought to provide an early glimpse into gasoline demand during the summer driving season.

The agency said that since April it has started to see a modest increase in online travel bookings, suggesting that people"s confidence is slowly improving. The agency said it expects that this summer, most travel will involve road trips to local and regional destinations.

Sand expects the spread between VLSFO and HSFO to widen to a more typical level of around $150-200/ton once the oil market becomes less volatile and the usual ratios between refined products start to emerge. Demand to retrofit scrubbers that can cost between $1.5 million and $5 million to install, according to IHS Markit analysts and industry sources, has slowed due shipyards suspending operations amid the COVID-19 pandemic.

Around 2,000 ships had scrubbers installed at the start of the year and this is forecast to around 3,400 ships by the end of the year, according to IHS Markit analysts.

Despite supply curtailments as US refinery run rates dropped to 70%, toluene supply has been building as the gasoline markets have essentially shunned the commodity chemical as blenders are swarmed with competitive offers for other blendstocks. The US produces about 8,250 mt/day of toluene; gasoline blending accounts for almost 50% of toluene demand.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

Lower exports are expected to provide further support to the broader Asian gasoline market, which started rebounding over the past few days on signs of a consumption recovery as some governments relaxed preventive measures against the pandemic, they added.

Gain greater transparency into Asia-Pacific markets for more strategic buy and sell decisions on refinery feedstocks, LPG and gasoline with theOPIS Asia Naphtha & LPG Report.

Record-high fuel margins in March led to retailers nearly tripling profits from selling gasoline before demand started to plummet due to the coronavirus disease 2019 (COVID-19), exclusive OPIS data shows.

Weekly gasoline profits are now starting to come back into line with 2019 levels. Margins have returned to levels seen before the start of the price war between Saudi Arabia and Russia, which led to the crash in the prices of crude oil and refined products.

Average gross margins in the United States hit an all-time high of 95.5cts/gal on March 23. Prior to this year, the previous record margin had been 59.3cts/gal. That record had been set on Oct. 6, 2008, at the start of the global financial crisis that led to the great recession.

Credit card revenue was slightly ahead of 2019 levels at the start of 2020 but dropped sharply as retail sales slipped due to the pandemic, according to OPIS estimates. The OPIS estimates assume the companies receive a 2% fee, known as a swipe fee, for each transaction and about 75% of fuel sales are paid for with credit or debit cards.

OPIS estimates weekly credit card company revenue hit a year-to-date high of $13.6 million on Jan. 12. That"s compared to last year"s January to February high of $13.77 million. Revenue continued to climb through March and April in 2019, but that"s not the case this year. In 2020, revenue slid steeply after the start of March and is only slowly beginning to recover. Weekly credit card company revenue from gas station sales fell to a low of $5.46 million during the week ending April 5 and had only climbed to $6.04 million during the week ending April 26. That"s compared to $16.68 million during the same week in 2019, according to OPIS estimates.

Front-month June landed Northeast Asian LNG prices rose to $2.3/MMBtu, 16.5% higher than the previous trading day and 24.3% more than at the start of last week on April 27, according IHS Markit OPIS assessments.

But others warned against seeing the higher prices as green shoots in the embattled LNG market, where front-month prices are still less than half of the $5.3/MMBtu at the start of the year due to demand destruction caused by the coronavirus disease 2019 (COVID-19).

Tracing the mood of the market, one trader pointed out that at the start of April a dismal, almost Armageddon-like, view of the market emerged as supplies increased exponentially and demand destruction inflicted every major fuel consumer.

"Crude was trading at huge discounts, ending in the negative price on WTI," he said. "Then the OPEC+ output cuts started to impact, suppliers were telling us of 20%, 30% cut in volumes and the contango started to come. All of which looks like a perfect V-shape recovery.

"The independents are benefiting the most from this floor price and are running at higher levels than last year," Feng said, adding independents generally return a lesser amount by way of windfall taxes to the government than national oil companies because their ex-refinery prices are typically lower.

Refinery runs in China are expected to increase to at least 67% of capacity in May, according to preliminary estimates from IHS Markit compared with typical rates of around 77% prior to COVID-19. Operations dropped to 55% in February before recovering to 60% and 65% in March and April, respectively, IHS Markit data show.

Aside from China, fuel demand in other major economics such as the United States an