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Product Markets and Refinery Operations

62

OPEC Monthly Oil Market Report – October 2017

European market

Product markets in

Europe

performed slightly better compared with last year, supported by higher demand

for gasoline and middle distillates as well as arbitrage opportunities to the US in the aftermath of the

Hurricane.

Premium gasoline

crack spreads were broadly flat

in September over the previous month, however the

spreads started the month at a two-year high level

before dropping to $18.69/b in the week ending

29 September. The development towards the end

of the month was driven by high regional supply

further exacerbated by reduced US arbitrary

opportunities.

The European

middle distillate

crack spread

showed moderate improvement, which was

attributed to demand amid planned seasonal

refinery maintenance. This was also supported by

product export opportunities to the US.

Crack spreads for

fuel oil

weakened, on the other

hand, due to strong regional supply, lower demand

and higher ARA inventories.

Graph 6 - 4:Rotterdam crack spreads vs. Brent

Asian market

The

Asian

product crack spread remained healthy and continued to show a gradual improving trend since

May 2017 amid higher regional product demand and the onset of maintenance season.

Weekly

gasoline

crack

spreads

initially

strengthened as export opportunities emerged.

However, as USGC refining operations were being

restored, weekly gasoline cracks exhibited a

downward trend, supported by low demand. For

September, gasoline crack spreads dropped by

73¢/b from a month earlier to average $13.60/b.

The

gasoil

crack spread averaged 15.30$/b in

September, improving over the previous month

amid higher arbitrage diesel supplies to Europe,

strong regional demand, and support from regional

refinery maintenance.

During the month,

fuel oil

crack spreads weakened

as utility and bunker fuel demand dropped, despite

declining inventories in the Singapore hub.

Additionally, fuel oil cracks received some pressure

from higher western arbitrage volumes.

Graph 6 - 5:Singapore crack spreads vs. Oman

-10

0

10

20

30

-10

0

10

20

30

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

US$/b

US$/b

Premium gasoline

Jet/Kerosene

Gasoil

Fuel oil

Sources: Argus Media and OPEC Secretariat.

-10

0

10

20

-10

0

10

20

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

US$/b

US$/b

Premium gasoline

Jet/Kerosene

Gasoil

Fuel oil

Sources: Argus Media and OPEC Secretariat.