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Product Markets and Refinery Operations

OPEC Monthly Oil Market Report – November 2017

59

Refinery operations

In the

US, refinery utilization

rates have been on

the rebound after the plunge observed last month

caused by hurricane disruptions. In early October,

refinery run recovery experienced a slowdown

caused by a slight drop in refinery intake as two

refineries were shut down prior to tropical storm

Nate to prevent damage. A reduction in scheduled

maintenance work on US refineries in October

supported throughput, as 41% of crude that was

offline in September was recovered. Refinery

utilization

averaged

87.5%

in

October,

corresponding to 16.2 mb/d, 3.1% higher compared

to the previous month, and 2.1% higher y-o-y.

European refinery utilization

rates averaged

89.9% in October, corresponding to a throughput of

10.4 mb/d, a drop of 2.8% compared to a month

earlier, down by a slight 1.0% y-o-y. The decline in

utilization rates came on the back of seasonal

maintenance, as a significant total of 2.2 mb/d of

refinery crude intake was projected to be offline in

October

Graph 6 - 2:Refinery utilization rates

In

Asia, refinery runs

in Japan in October averaged 81.7%, a decline of 8.7% compared to a month earlier

and an increase by 5.7% y-o-y. Meanwhile, in China, refinery utilization rates averaged 86.8% in October,

down by 6.8% m-o-m, and a drop of 1.8% y-o-y. The decline of refinery rates in Asia is due to continuing

significant maintenance previously scheduled for October. Despite a decline compared to the 5-year record

high refinery utilization observed in China last month, owed to Petrochina’s Yunnan 260 tb/d refinery start-up,

higher throughputs are expected in the coming months as the CNOOC Huizhou 200 tb/d refinery begins full

operation and refinery maintenance season comes to an end.

Product markets

US market

US product markets

weakened in October,

despite receiving support on the back of strong

product demand from the middle of the barrel.

Lower product stock levels and refinery

maintenance provided further support.

Jet/kerosene crack spreads

in October dropped

by $5.7/b m-o-m to average $18.49/b, but exhibited

a $7.2/b improvement over the previous year.

Gasoil crack spreads

averaged $14.53/b, down by

$2.1/b m-o-m, but showed a $5.13/b improvement

compared to a year earlier, on strong support from

export opportunities.

The

fuel oil market

in the US weakened, as

tightening market sentiment amid low stock levels

on the back of high net exports was offset by higher

domestic supplies. US fuel oil cracks dipped by

$2.7/b over the previous month to average minus

Graph 6 - 3: US Gulf crack spread vs. WTI

$4.0/b and improved $5.13/b y-o-y.

70

80

90

100

70

80

90

100

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

Oct 17

%

%

US

EU-16

Japan

Singapore

Sources: EIA, Euroilstock, PAJ, Argus Media

-20

-10

0

10

20

30

40

50

-20

-10

0

10

20

30

40

50

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

Oct 17

US$/b

US$/b

Premium gasoline

Jet/Kerosene

Diesel

Fuel oil

Sources: Argus Media and OPEC Secretariat.