OPEC MOMR November 2017
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Product Markets and Refinery Operations

58

OPEC Monthly Oil Market Report – November 2017

Product Markets and Refinery Operations

Product markets in the Atlantic Basin weakened during October due to a decline in gasoline demand

following the end of the US driving season. Nevertheless, the US saw solid product demand for this time of

the year, global product markets were tight on low stock levels, and reduced scheduled maintenance lent

some support to margins.

In Europe, refinery margins declined amid high product supplies, lower demand and higher stock levels

seen at the top and bottom of the barrel, while margins received some support from the middle of the barrel

on the back of solid demand.

In Asia, product markets also weakened slightly, but remained healthy as support came from the top and

middle of the barrel, on the back of firm regional demand, supported by the onset of refinery maintenance.

Refinery margins

US product markets

received very strong support

in the previous months on the back of significantly

higher US gasoline demand. However, with the end

of the driving season in the US, the typical seasonal

slowdown in gasoline demand has exerted

pressure on the gasoline market in the Atlantic

Basin. Sharp losses across the barrel caused

refinery margins to decline. In the USGC, refinery

margins weakened significantly due lower seasonal

demand despite remaining at healthy levels amid

low inventories. Refinery margins in the US

averaged $12.4/b in October, dropping $3.8/b

m-o-m, but higher by $6.0/b y-o-y.

The

European product market

showed a weak

performance in October as refinery margins fell due

to pressure coming from the supply side with

increasing inflows amid a lack of export

opportunities impacting the top and bottom of the

barrel. The refinery margin for Brent Crude in

Graph 6 - 1:Refining margins

Northwest Europe dropped by $2.4/b from the previous month to average $7.03/b, unchanged compared to

same month a year ago.

Asian product markets

also weakened slightly on reduced arbitrage opportunities to Europe, despite

healthy regional demand in Asia, offset by supply side pressure resulting from the start-up of capacity

expansion in the Chinese refining sector. The Asian market saw weakening all across the barrel, with the

exception of naphtha, which continued to strengthen m-o-m. The refinery margin for Oman in Asia dipped by

$1.7/b from a month earlier to average $9.36/b, gaining $1.6/b y-o-y.

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Oct 16

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Jan 17

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Oct 17

US$/b

US$/b

WTI (US Gulf)

Brent (Rotterdam)

Oman (Singapore)

Sources: Argus Media and OPEC Secretariat.