Crude Maybe Available Now, Refined Fuel Is Not Despite Record Runs

The 3:2:1 crack reached $67.27/bbl and the heat crack $84.50/bbl against WTI near $79.31/bbl, placing the heat crack above the value of crude itself. Gulf refinery outages, reduced Russian diesel output and restrained Chinese product exports have removed refined fuel from the global market even as crude remains available near $80/bbl. US distillate exports fell by 133,000 bpd and gasoline exports by 59,000 bpd last week, while refinery utilization already stood at 96.2%. One weekly decline does not establish a structural US export retreat, but it shows how little spare refining capacity remains to replace lost Gulf, Russian and Chinese supply.

Heat Crack

The US soybean oil balance tightened despite a June crush of 214.34 million bushels, 16% above last year. Soybean oil stocks still fell to 1.501 billion pounds, while August retained a 2.08-cent/lb premium over December. BOGO recovered as soybean oil started catching up with gasoil, while D4 RINs held near $2.46. This RIN value shows the US is bidding aggressively for additional biodiesel and RD supply, but limited imports show the landed arbitrage has not yet cleared in meaningful volume. Foreign-feedstock gallons receive no 45Z support, face tariff and regulatory uncertainty, and require production and shipping lead time. Gross screen margins near $1.51/gal for biodiesel and $1.04/gal for RD remain incentives rather than realized earnings after feedstock, hydrogen, freight and operating costs.

US Soyoil Stocks

Europe recorded firm physical values, with RME near $1,532/mt, FAME 0 near $1,515/mt and UCOME near $1,632/mt. The prompt RME premium over FAME remained modest at $16.75/mt, consistent with August-to-October rapeseed oil near €1,210/mt versus soybean oil near €1,200/mt. UCOME retained a much larger $117.50/mt premium over FAME, confirming the stronger compliance value attached to waste-based feedstocks. Palm oil remains largely outside the European crop-based biodiesel pool, while Annex IX waste streams such as palm oil mill effluent retain relevance. HVO Class II near $2,624/mt or $1000 above UCOME also shows why high headline credit values do not automatically translate into strong producer returns.

Asia remains the center of palm oil supply, with July CPO near $1,125/mt and September near $1,142/mt. Prompt POGO stood near $40/mt for August and $100/mt for September, showing favorable palm biodiesel economics against gasoil. Indonesia’s mandate headlines range from B35 to B40, with B50 also discussed, but current POGO and CPO pricing do not confirm a sudden increase of 5 to 15 percentage points in domestic absorption. India imported 1.11 million tonnes of vegetable oil in June, including 488,000 tonnes of palm oil and 381,000 tonnes of soybean oil. Chinese September rapeseed oil traded near CNY9,944/mt, while China exported 1.36 million tonnes of UCO from January through May, keeping Asian waste oils tied to the highest-paying compliance markets.

The market still lacks a clear adjustment mechanism. The $84.50/bbl heat crack points to insufficient refining output, the $2.46 D4 RIN reflects the cost of attracting additional renewable fuel, and US soybean oil stocks at 1.501 billion pounds show domestic feedstock supply remains tight despite record crushing. Limited imports mean the US balance is still clearing through domestic production, RIN-bank use and higher feedstock prices. Restored refinery capacity, lower transport-fuel demand, larger biodiesel and RD imports or policy relief must close the gap. Until one of those changes appears in physical volumes, refined-product cracks, RINs, soybean oil inventories and European biofuel premiums will remain the clearest indicators of continued subdued rationing until world realize that we have a serious refined fuel issue growing fast that goes beyond biofuels.