Gasoline grows and turns green – Newspaper Kommersant No. 39 (7484) dated 03/07/2023
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Exchange prices for gasoline, which resumed their rapid growth in the first half of February, approached the maximum values for the year. The Ministry of Energy attributes this to an increase in demand and notes the extremely low level of prices at the beginning of the year. Analysts agree that quotes are now recovering to fair values, taking into account the growth of the export alternative and the reduction of the damper since April. At the same time, market participants are paying attention to the growth in fuel exports against the backdrop of the start of the repair season at refineries.
The cost of gasoline AI-92 and AI-95 increased on March 6 by 2.6% and 2.5%, to 47.7 thousand and 50.9 thousand rubles. per ton, respectively, follows from the data of SPIMEX. Steady growth in fuel prices resumed in the first half of February and is now at its highest levels in the last year, equaling the values of the end of summer 2022.
After the outbreak of hostilities in Ukraine, the Russian fuel market was in surplus due to the refusal of most European buyers to purchase Russian oil products. On February 5, an official EU embargo on the import of Russian fuel came into force. At the same time, a price ceiling was introduced, according to which companies from the EU and the G7 countries cannot provide services for sea transportation and insurance of Russian fuel if the sale price exceeds the established limit – $100 per barrel of gasoline and diesel fuel.
Currently, export fuel prices are below the ceiling, which allows Russian companies to maintain large volumes of exports.
Kommersant’s sources attributed the resumption of growth in fuel prices in February to the fact that the Ministry of Finance decided to reduce compensation to oil companies for the damper from April amid a decrease in budget revenues due to the fall in Urals prices, as a result, market participants began to buy fuel for the future. The government also announced plans to cut production by 500,000 bpd in March, possibly raising concerns about a potential reduction in refining. At the same time, refinery utilization did not decrease in February (see “Kommersant” dated March 6). Another interlocutor of Kommersant claims that oil companies are increasing the volume of fuel exports.
In addition, planned refinery repairs begin in March. According to Reuters, Rosneft’s Komsomolsk refinery will begin scheduled repairs this week, which will cause it to suspend sales of gasoline and diesel fuel.
One of Kommersant’s interlocutors fears that the repair time may increase due to EU technological sanctions against oil refining, which were introduced a year ago.
The domestic market of petroleum products is supplied in full, Kommersant was told in the Ministry of Energy. Recently, wholesale prices have been at a record low, they add, now there is a recovery in demand and the associated price change, but even so, the cost of gasoline in the wholesale segment remains lower than last year by an average of 20%.
According to the ministry, gas stations now have a high profitability, exceeding the traditionally characteristic level for the current month, so changes in stock prices for fuel will not affect prices at gas stations.
Prices have been rising since February and have reached an export alternative for gasoline, said Rinat Fattakhov, Vice President of the Russian Fuel Union. “I don’t remember such a stable and steady rise in prices for three weeks, but the cost of the goods was very low,” he notes. “High commodity balances, stable production indicate a favorable short-term outlook.” But Mr. Fattakhov confirms that he is worried about the increasing export of fuel on the eve of repairs, although this factor is offset by the fact that domestic prices have already reached the level of the export alternative.
Since March, oil exports have been improving due to demand in Asia, explains Boris Sinitsyn from Renaissance Capital. He believes that damper cuts since April have played a role in the rise in prices, but this is not the most significant factor that can be estimated at 5% of the current wholesale price of gasoline. “Ultimately, gasoline prices in late 2022 and early 2023 were at very low levels compared to the Urals oil export alternative and the indicative prices on which the damper is calculated, so the current increase is associated with a recovery to fair values,” — says Boris Sinitsyn.
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