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Product Markets and Refinery Operations
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OPEC Monthly Oil Market Report – June 2016
spread against Brent saw a drop of $2 from the previous month, to average around
$23/b in May.
The light-distillate
naphtha
crack weakened as domestic demand has been falling due
to the French petrochemical producers being impacted by the labour strikes. Additional
pressure has come from higher inventories amid lower arbitrage opportunities to Asia.
Graph 6.4: Rotterdam crack spreads vs. Brent, 2015-2016
The European
gasoil
market showed a recovery during May on the back of support
coming from strong domestic demand reported from several countries, mainly Italy and
Spain, along with higher requirements from Egypt and Algeria. Additional support came
from the supply side with some slow-down seen in imports from the Middle East, thus
contributing to the easing of the oversupply by offsetting the continued higher imports
from India and Russia. The gasoil crack spread against Brent crude at Rotterdam
averaged around $10/b in May, gaining around $2 versus the previous month’s level.
The potential additional gains in the crack spreads, due to the tightening sentiment
fuelled by the strike at French ports and refineries, were capped by floating storage
outside several European ports and high ARA inventories.
At the
bottom of the barrel
, the fuel oil market continued under pressure due to a lack
of arbitrage opportunities to Singapore as inventories remain high in that region. On the
other hand, the expected increase in Baltic exports following the end of the Russian
refinery maintenance season has also been exerting some pressure. The NWE Europe
fuel oil crack lost 50¢ versus the previous month to average around minus $14/b in
May, hitting the lowest level seen this year.
-20
-10
0
10
20
30
40
-20
-10
0
10
20
30
40
May 15
Jun 15
Jul 15
Aug 15
Sep 15
Oct 15
Nov 15
Dec 15
Jan 16
Feb 16
Mar 16
Apr 16
May 16
Jun 16
US$/b
US$/b
Premium gasoline
Jet/Kerosene
Gasoil
Fuel oil
Sources: Argus Media and OPEC Secretariat.