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US Gasoline Cracks Fall Below 5-Year Average Despite Refiner Rally, TPH Says

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US gasoline cracks dropped $6 per barrel to $18/bbl last week after inventory data showed a surprise 3.4 million-barrel build compared with expectations for a 2.5 million-barrel draw, TPH Energy Research said Monday.

Falling below the seasonal five-year average, gasoline margins weakened while US diesel cracks slipped $1 to $40 per barrel following a 1.5 million-barrel inventory increase versus expectations for a 2 million-barrel decline.

Posting the sharpest regional decline, Midwest 3-2-1 cracks fell $15/bbl, while gasoline cracks in Northwest Europe and Singapore dropped $3/bbl and $5/bbl, respectively.

Diesel margins in Northwest Europe and Singapore increased $5/bbl and $3/bbl, respectively, while the Brent-WTI differential narrowed to $2/bbl from $3/bbl.

Alaska North Slope crude widened its premium to Brent by $2/bbl and traded at a $12/bbl premium, bucking the broader trend of narrowing crude differentials.

Among recent industry developments, Russia's 160,000-barrel-per-day Tyumen refinery suffered a fire, while Dangote outlined plans to expand refining capacity from 700,000 b/d to 750,000 b/d over the next 30 months.

Separately, over 300 vessels reportedly contacted Iran about transiting the Strait of Hormuz, while Chevron's (CVX) California refineries received Strategic Petroleum Reserve barrels, according to TPH.

Despite softer refining margins and weak inventory data, refiner equities gained 3.5% during the week and outperformed the S&P 500's 2.6% decline, TPH said.

Delek (DK) led the group with an 8.5% advance as investor interest increased ahead of expected 2025 Small Refinery Exemption decisions, which TPH estimates could amount to about 23% of the company's market capitalization.

On the valuation front, refiners traded at 6.0x next-12-month consensus EV/EBITDA, below the sector's three-year average multiple of 6.5x, TPH said.

Price: $48.85, Change: $+0.57, Percent Change: +1.18%

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