Russian premium gasoline climbs to record high on driving rebound
Russian premium unleaded gasoline 95 RON climbed to a record high on June 18 on the back of a rebound in driving to levels before the coronavirus pandemic took hold.
95 RON basis FCA Moscow traded as high as Rb58,000/mt ($835.70/mt) on the St. Petersburg exchange June 18, the highest ever, according to S&P Global Platts data. Prices had previously set a record below Rb57,000/mt in 2018. Nearby Ryazan finished trading at Rb59,305/mt.
“I don’t remember such prices ever,” a trader said.
Gasoline has been climbing since the end of April as demand gradually recovered at a time when refineries reduced throughput or were out for maintenance.
At the start of June, Russia’s energy ministry asked oil producers to reduce gasoline exports and increase domestic deliveries. According to the ministry, June gasoline demand was expected to be down 10% year on year after the nearly 50% demand destruction seen in mid-April after Russia introduced strict restrictions to control the virus.
Gasoline demand in June has now exceeded levels before the coronavirus took hold after Russia eased lockdowns and more people took to driving rather than use public transport.
“We have more traffic jams than usual,” the trader said.
Russian refining activity has been slow to recover after contracting in April and May. It fell 400,000 b/d month-on-month in May, and 255,000 b/d year-on-year, the International Energy Agency said in its monthly report earlier this week.
“Everybody thought that there would be a substantial demand slump in May, but that did not happen,” another trader said.
Traders had noted that Russian refineries have been struggling to secure crude as gasoline demand started to rise in May and surged further in June.
“Demand is back but refineries did not increase throughput,” a third trader said.
Apart from cutting runs, a host of refineries, including plants in the Samara and Ufa refinery hubs, Omsk, Moscow, Yaroslavl have been undergoing seasonal maintenance and while some, as Omsk and Moscow have restarted, others are not fully back online. Crude oil output cuts as part of the OPEC+ agreement have curbed crude supply for domestic processing, sources said.
In addition, the government slashed required volumes of oil product sales via exchanges by half between April 1 and June 30. Companies are now required to sell 5% of gasoline, 3% of diesel, 5% of jet fuel, 1% of fuel oil and 2.5% of LPG produced on exchanges.
As maintenance works draw to a close and sales on the exchange return to normal levels, July will see increased availability, sources said.