The market price of gasoline began to rise against the backdrop of repairs at refineries and high demand

Having fallen by about 25% over the month compared to mid-September highs, the stock price of gasoline began to rise, despite the ongoing embargo on its exports, against the backdrop of repairs at refineries and continued high demand. Experts consider the increase in prices to be a correction, but do not undertake to make forecasts of their dynamics. The latter depends on the ruble exchange rate, oil prices and government decisions to lift the export ban.

Wholesale gasoline quotes at SPbMTSB have been gradually increasing since October 12, and on October 17, the price of diesel fuel also began to increase. Thus, AI-92 gasoline rose in price by 1.1%, to 53.3 thousand rubles. per ton, AI-95 grade – by 0.4%, to 57.3 thousand rubles. per ton, summer diesel fuel – by 0.15%, up to 57 thousand rubles. per ton. Although prices are recovering slightly after falling at the end of September, they are a quarter lower than the peaks a month ago, when the price of gasoline exceeded 70-75 thousand rubles. per ton, and summer diesel fuel – 75 thousand rubles. Let us remind youthe government banned the export of fuel from September 21, and although relaxations were then made for diesel fuel in October, the embargo on the export of gasoline remained in full force.

The fact that wholesale gasoline prices have nevertheless begun to recover indicates stable demand for fuel amid reduced supply due to refinery repairs.

In September, many repairs were postponed to October at the request of regulators, so as not to provoke an additional increase in prices during the high season. Thus, the Moscow Gazprom Neft refinery, which is key for the central region, has been shut down for repairs since October 10, which has caused a reduction in gasoline shipments for delivery in the coming weeks and may be significant for small networks of gas stations that operate “from the wheels.” Other oil companies have begun repairs in order to reduce the production of diesel fuel and thereby avoid overstocking their tank farms in conditions when export is possible only through pipelines, Kommersant’s sources explain. According to Reuters, the volume of primary oil refining in Russia in September on average per day decreased by 3.5%, to 22 million tons.

Warm weather in central Russia also helps support household demand for gasoline, which usually declines with the onset of cold weather. Therefore, refineries do not yet experience such problems with overstocking of gasoline storage facilities, although usually in November oil companies begin to export gasoline more actively against the backdrop of declining demand on the domestic market. At the same time, the economics of oil refining, given the fallen domestic fuel prices and the still high price of oil for refineries (it is calculated based on export netback), remains unattractive. Oil companies, however, hope to receive full subsidies for October as part of the damper, which could amount to at least 300 billion rubles at the current exchange rate and price of oil. However, the government has not yet introduced the corresponding amendments to the Tax Code to the State Duma, although a fundamental decision to restore full payments for the damper has already been announced.

The deadline for lifting the export embargo on petroleum products is also unclear. Although oil companies can export diesel fuel via oil pipelines from October 7, in practice only the Kirishi, Yaroslavl, Nizhny Novgorod and Volgograd refineries have technological access to these routes. In this situation, large Rosneft refineries in the Volga region, as well as Gazprom Neft plants in Moscow and Omsk, are forced to supply fuel only to the domestic market.

According to the managing partner of Petroleum Trading, Maxim Dyachenko, what is happening now with stock quotes is not growth, but actually a correction.

“When prices fall sharply, many people postpone purchases, and when these consumers begin to fix their positions, prices rise correctionally,” he explains. The expert recalls that an increase in quotations is mainly observed only in the gasoline sector, while prices for diesel fuel are steadily declining. According to him, it is difficult to make forecasts for further price movements, since it will depend on the global market situation and decisions of the authorities to regulate the sector.

Olga Mordyushenko