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Product Markets and Refinery Operations

60

OPEC Monthly Oil Market Report – November 2017

European market

Product markets in Europe

weakened in October on high gasoline and fuel oil supplies, although receiving

some support from solid middle distillate demand.

Premium

gasoline crack spreads

showed a drop

of $4.7/b m-o-m, driven by high regional supply

which was further pressured by reduced US

arbitrage openings. The gasoline crack spread

averaged $18.8/b, down by $1.57 y-o-y.

The European

jet/kerosene crack spread

averaged $14.08/b, down slightly by 60¢/b m-o-m

as weaker demand was offset by refinery outages,

but remained up by $2.32/b y-o-y.

The

gasoil market

in Europe mostly continued the

strong performance during the month to decline

slightly by 85¢/b over a month earlier to average

$14.41/b, exhibiting a $2.33/b gain y-o-y.

European

fuel oil 3.5% crack spreads

weakened

slightly due to high regional supply, lower demand

and higher ARA inventories. Fuel oil cracks

dropped by 86¢/b from the previous month to

average $14.41/b, but showed a $2.33/b gain y-o-y.

Graph 6 - 4: Rotterdam crack spreads vs. Brent

Asian market

Asian product crack spreads

in October are on a gradual downward trend, despite solid regional demand

and some support from naphtha and ongoing refinery maintenance work offset by supply side pressure due

to Petrochina’s Yunnan refinery capacity addition. Additional pressure also emerged from the exhaustion of

Chinese product export quotas, which limited refineries and traders export volumes.

The Asian

gasoline crack spread

dropped m-o-m

showing a $1.86/b dip for Gasoline 92 and a

$2.07/b dip for Gasoline 95. At the same time,

Asian gasoline cracks showed a 86¢/b y-o-y gain

for gasoline 92 and 60¢/b y-o-y gain for Gasoline

95. In the month of October, gasoline cracks

weakened seasonally, however they remained

supported by strong domestic and regional demand

from India and Japan. Furthermore, Naphtha cracks

also strengthened on strong petrochemical

feedstock demand during the month.

The

jet/kerosene crack spread

in Asia declined by

$1.4/b from the previous month to average

$14.32/b, receiving some support from strong

regional demand from India. Y-o-y, the crack

gained $1.90/b.

The

gasoil crack spread

in Asia dropped by 98¢/b

over a month earlier to average $14.41/b but

gained $2.33/b y-o-y, despite support from strong

regional demand.

Graph 6 - 5: Singapore crack spreads vs. Oman

During the month, the

fuel oil crack spread

exhibited weakening, down by 47¢/b m-o-m, as demand of

lower utility and bunker fuel dropped, amid higher western arbitrage volumes.

-10

0

10

20

30

-10

0

10

20

30

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

Gasoil

Fuel oil

Sources: Argus Media and OPEC Secretariat.

-10

0

10

20

-10

0

10

20

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

Gasoil

Fuel oil

Sources: Argus Media and OPEC Secretariat.