OREANDA-NEWS. April 13, 2015. There are a couple months of the year that seem busier than others, and April is one in the oil industry. The first quarter has ended, and many of the editors here at Platts are readying themselves for the slew of earnings calls and reports that will be coming soon. Those quarterly updates can sometimes signal big changes – announcements about new projects, financial doings, production figures, etc. – and we wanted to assess the global oil industry now, in the calm before the storm.

This is the April edition of The Oil Big Five, and, as usual, we are presenting the biggest oil topics or issues as nominated by our editors and analysts worldwide. There’s another side to the coin, though, and that’s what you would nominate as your big interests for the month.

Tell us what you’re seeing in your segment of the industry, or how you’re being affected by the oil industry, by leaving us a comment below or finding us on Twitter with the hashtag #oilbig5.

1. Basrah Heavy crude

The global crude market will see a fresh flow of heavy sour Kurdish barrels in May thanks to a crude supply deal between Baghdad and Erbil signed at the end of last year.

The plan is for Iraq’s State Oil Marketing Organization to split the output of its Basrah crude into heavier and lighter grades, with some of the heavier oil (API gravity of 25 or 26 degrees) going as payback to contractors who are owed payments.

The other grade, Basrah Light, will likely see some quality improvement, but will also be less available on the markets after the split. SOMO is expected to start publishing a new OSP for Basrah Heavy, beginning for cargoes loading in May. It will be interesting to see where Basrah Heavy finds an outlet and what it does to margins in the process.

2. European refining margins

Speaking of margins, European refining margins have languished for a few years now (you can see where margins were one year ago in this feature), but a widespread rebound has boosted the industry. In late March, Brent cracking margins hit a more than two-year high.

There’s been stronger-than-expected demand for refined products in Europe — such as a big uptick in gasoil demand in Germany, supported by economic growth — and the International Energy Agency expects European oil demand to see near 1% growth this year.

The rebound has even boosted what one editor called “habitual laggards,” such as Mediterranean refineries. (The Mediterranean market saw tightening sweet crude supplies as a result of weather delays.) But like all booms or rebounds — even modest ones — the question remains how long this one will last.

3. Asian gasoline tops gasoil

Asian gasoline prices were their strongest in years in March, driven by refinery turnarounds, regional demand and arbitrage flow to the US. Singapore’s gasoline front-month crack spread was higher than the equivalent gasoil contract in March for the first time in five years.

Japan, as an example of the trend, saw gasoline exports rise to an all-time high of around 75,000 b/d in the first quarter and improved refining capacity.

Gasoil is still considered the king of the barrel, but looking into the future, changing trends of gasoline consumption in big Asian consuming centers such China and India — as well as in potential export markets — make one wonder whether gasoline will someday reign as the most lucrative product in the barrel.

4. US West Coast gasoline imports

And those Asian gasoline cargoes into the US West Coast weren’t the only ones: cargoes from Canada and the United Kingdom were set to arrive in the West Coast in late March and early April as well.

The last time a gasoline blendstock cargo arrived in the West Coast from the UK was January 2012, although US Energy Information Administration data shows one arrived roughly every other month before 2008.

It appears that the small window for US gasoline imports to the West Coast has closed, though. Gasoline prices fell recently and EIA data for the week ended April 3 showed total US gasoline stocks rose while implied gasoline demand fell. While the imports may have been rare, should we keep an eye out for the next occurrence?

5. Brent crude swaps volumes

As one editor put it, Brent crude swaps are “the least well-known aspect of the crude markets,” but they got some attention during the first quarter of 2015 with big volumes as banks tried to ride the rebound from multiyear lows.

In January, the first three monthly of the Dated-to-Frontline (DFL) swaps differential hit levels not seen since the 2009 oil crash. Contango-related hedging sent banks and other financial entities looking for exposure to Dated Brent instead of just ICE Brent futures, increasing DFL swap liquidity.

As a result, average daily DFL volume in 2015 thus far is more than double that of 2014. (Average daily volume has progressively increased over the years, from only 1,800 in 2009.) As of March 27, a total of 584,562 lots (of 1,000 barrels each) have traded so far this year, compared with 1.2 million lots traded in the whole of 2014.

As a side note, there are some similar developments in related markets, like the Exchange of Futures for Swaps (EFS) and Exchange of Swap for Swaps (ESS) markets. Will the spring bring more frenetic trading of Brent crude swaps, or will activity level off at some point in the near future?