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Product Markets and Refinery Operations
OPEC Monthly Oil Market Report – June 2016
59
Product Markets and Refinery Operations
A high level of light and middle distillate inventories, along with the approaching
end of the spring maintenance season, offset the potential impact of refinery
outages seen in Canada and France, causing margins to slightly fall in the
Atlantic Basin, despite stronger gasoline demand in the region. Meanwhile,
refinery margins in Asia showed a slight recovery on the back of stronger
regional demand amid the peaking of refinery maintenance.
Graph 6.1: Refinery margins, 2015-2016
US
product markets continued to be supported by stronger domestic gasoline demand,
which continued rising during May, hitting levels not seen since 2007. However, despite
the higher demand, gasoline crack spreads were under supply pressure due to higher
imports, along with the re-start of several gasoline/producer units. Meanwhile, the
temporary tightening sentiment caused by Canadian crude supply disruptions was
offset by increasing refinery runs, with several refineries returning from maintenance.
US Gulf Coast (USGC) refinery margins for WTI crude dropped by around $1/b versus
the previous month’s levels to average around $7.5/b in May.
Product markets in
Europe
showed a mixed performance during May as the middle of
the barrel exhibited some recovery, supported by stronger regional demand, while the
gasoline crack spread weakened. This mixed performance, along with higher product
inventories, offset the potential impact of French refinery outages, causing refinery
margins to slightly fall in Europe. The refinery margin for Brent crude in Northwest
Europe (NWE) showed a loss of 50¢ versus the previous month, to average $6.3/b in
May.
Asian
product markets strengthened slightly in May, supported by stronger regional
demand amid a peak in refinery maintenance in the region. Refinery margins in
Singapore recovered slightly by 20¢ to average $7.6/b in May. The uptick in margins
was limited by pressure exerted from the oversupply environment.
0
5
10
15
20
0
5
10
15
20
May 15
Jun 15
Jul 15
Aug 15
Sep 15
Oct 15
Nov 15
Dec 15
Jan 16
Feb 16
Mar 16
Apr 16
May 16
US$/b
US$/b
WTI (US Gulf)
Brent (Rotterdam)
Oman (Singapore)
Sources: Argus Media and OPEC Secretariat.