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Product Markets and Refinery Operations

56

OPEC Monthly Oil Market Report – August 2017

Product Markets and Refinery Operations

Refinery margins in the Atlantic Basin saw mixed movement in July, while US margins recorded solid gains

as crack spreads for all products increased due to healthy domestic demand. Margins in Europe weakened

in response to product oversupply, limited export opportunities and higher feedstock costs. Meanwhile,

margins strengthened in Asia, supported by healthy seasonal demand.

Refinery margins

US

product crack spreads improved during July despite higher WTI prices m-o-m. Total gasoline demand

continued to increase to reach around 9.7 mb/d, based on preliminary weekly data, to the highest level of

total consumption seen in 2017. Additionally, middle distillate demand strengthened, supporting a rise in

margins. US Gulf refinery margins for WTI crude gained more than $2/b versus the previous month’s levels

to average around $10.06/b during July, with refinery utilization rates reaching as high as 93.5%.

Graph 6 - 1: Refinery margins

Product markets in

Europe

showed mixed performance during July, with the top and bottom of the barrel

weakening due to regional oversupply amid limited export opportunities, as well as higher feedstock values

m-o-m. The refinery margin for Brent crude in Northwest Europe (NWE) saw a marginal decline of $0.4/b

versus the previous month to average $7.6/b. Further losses in margins were avoided by the strong gains

exhibited by the middle of the barrel on the back of a healthy demand and increased exports.

Asian

product markets exhibited improvements across all products with the exception of fuel oil. Strong

seasonal demand and reduced stocks levels supported margins. Refining margins for Oman increased by

$1.0/b to $9.3/b in July from a month earlier.

2

4

6

8

10

12

2

4

6

8

10

12

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

US$/b

US$/b

WTI (US Gulf)

Brent (Rotterdam)

Oman (Singapore)

Sources: Argus Media and OPEC Secretariat.