Alex Lawler, Noah Browning

LONDON (Reuters – Sky-high gasoline refining margins in Europe and America have driven up prices of some physical goods to record levels, traders say.

As the US summer driving season begins, the dearth in fuel in key consuming countries has pushed up asking prices to levels not seen in recent history for lighter and intermediate oil types.

These sharp increases are a result of tight markets and difficulties in lowering transport fuel prices. This has pushed inflation to 40-year highs, and caused recession fears in some countries and parts of Europe.

According to Refinitiv Eikon data, the $8 premium for Escravos and medium sweet Forcados Blend crudes from Nigeria has reached its highest level ever.

They can easily be refined to make middle distillates such as diesel. Qua Iboe is another type of Nigerian crude oil which is suitable to be refined into gasoline.

“Nigerian crude is being supported by gasoline and distillate shortages in general in Europe and the United States,” a West African crude trader said.

Northwest Europe’s gasoline refining margins (also known as cracks) reached an all-time high of just above $40/barrel last week. Then, it dropped another $10, still close to 2015 peak levels. Last week saw stocks fall 25%, or 250,000 tons,

Traders stated that Oseberg, Ekofisk and North Sea differentials have reached all-time highs partly because of lower loadings for maintenance.

Seaborne non Russian barrels from Norway and other countries, which were imported to Gdansk in the Polish Baltic Sea port, are increasing as eastern Europe’s refineries look for alternative oil.

United States: The price of gasoline-friendly West Texas Intermediate (WTI), light sweet crude oil from the U.S. rose to its highest point since March.

The average diesel price in the United States hovered at $5.58, a record, which was up 3 quarters over last year. Additionally, the gasoline retail price per gallon topped $4.37, also a record.

One European refiner source stated that gasoline (and distillate) have already been reduced by several hundred dollars. The differentials must be removed as soon cracks undergo some correction.