Wholesale gasoline prices in Russia reached a maximum value this year and at least equal to the level of may last year, although oil prices are now much lower. The reason for the growth was a serious — more than 20% — reduction of production of gasoline in may due to poor market conditions and refinery output in repairs, which is superimposed on a sharp lifting of quarantine measures and the resulting growth in demand. Independent gas stations because of rising prices, complain about the decline in profitability, but the Ministry of energy and the FAS don’t see a reason to panic. Experts believe that the momentum in retail prices in any case be moderate and not exceed inflation.The price of AI-92 and AI-95 on SPIMEX increased by 23% and 33% since the beginning of may, to 48.9 thousand RUB thousand RUB 55 per ton, respectively. This is the highest value this year, which was understandable: the prices in Russia traditionally grow in may, during a period of high demand and repairs at the refinery. But current prices have caught up — and for AI-95 exceeded the maximum 2019. But then the price of Brent crude oil exceeded $60 per barrel, and now it’s around $41 per barrel.Interlocutors “” in the industry and experts explain that the refinery in may, sharply reduced production — partly for repairs and partly trying to adapt to the falling demand for fuel as the result of quarantine measures. In addition, given the low export prices and the need to pay a damper in the budget to produce the fuel was, in some cases, unprofitable.But in the second half of may in Moscow and in most regions started to remove the restrictions, which led to a sharp increase in fuel demand and the market suddenly ceased to be a surplus. “People are more likely to use private transport, ignoring the public due to security reasons,” says one of the interlocutors “Kommersant”. According to him, in Moscow, which consumes about 20% of fuel in Russia, instantly snapping up all the goods.Last week, the energy Ministry held a meeting, encouraging oil companies to increase production of gasoline in June to 3.1 million tons, and increase shipments to the domestic market, including due to the reorientation of exports. The latter is growing as an export netback increased after the price of oil and the export duty, calculated on the low of the may quotes, remains at a minimum of $8 per ton.The head of the Russian fuel Union Evgenie Arkusha considers the situation of fuel prices in the opt “serious”. Demand has returned to the level before the quarantine, he said, and gasoline production last week was below the level of the 2019 25%. Though oil companies are increasing production, but it is unclear when they will be able to fully meet the demand, some refineries are still in the repair, said Mr. Arcos. According to him, the growth of wholesale prices has led to losses in retail. Prices at the gas station until stable for ��rosley week, according to Rosstat, grew by 0.1% YTD 0.4%.The energy Ministry said “Kommersant” that the consumption of gasoline and diesel fuel in average on 20% below last year’s levels, and gasoline production by 10%. Current commercial gasoline stocks stable at 1.3 million tonnes in the coming week is expected to increase reserves after leaving the repair of several major refineries. The Ministry believes the price growth is a seasonal phenomenon that repeats dynamics to 2019. The Ministry of energy estimate the gross wholesale-retail margins (from refinery to refueling) to 5,5–5,8 RUB per liter, which “is a healthy level of margins” which will keep retail prices within inflation.The increase in stock prices is associated with the recovery of demand for fuel, while the growth of netball, said Sergey Yezhov from Vygon Consulting. The stabilizing role played by the damper, which decreases with increasing netback, which allows to keep the prices of the domestic market, says the expert. According to him, now for the growth of prices of filling stations are no prerequisites, the gross retail and wholesale margin, although reduced, but its level exceeds the costs.The head of “Petromarket” Ivan Khomutov believes that the damper (which oil companies pay to the budget) for gasoline in June could reach $ 8.6 thousand rubles per ton, compared to 13.1 thousand RUB in may. According to him, in may, gasoline production decreased by 21% year-on-year in June, the reduction can be 5%. Ivan Khomutov agree that the margin of gas stations has dropped significantly, but believed that in any case, the increase in retail prices will be within inflation due to tight control by the state.Dmitry Kozlov
