Refined Products Imbalance Seen by IEA Supporting Cracks, Oil Price
Rising global oil products demand amid outages and delays at large refineries in India, the Middle East and Latin America is helping prop up crude demand and oil prices, which have gained about a third since hitting multi-year lows in January, the International Energy Agency's (IEA) monthly report said.
The Paris-based agency said delayed capacity ramp-ups at refineries in non-OECD regions reached 1.5 million b/d in the first half of 2015, forcing refiners elsewhere but especially in Europe to compensate. The product imbalance supported crude prices and pushed up refinery utilization rates in Europe to 84%, and 88% in the U.S, the report said.
"High demand combined with limited throughput has kept product stocks in check product cracks supported and caused backwardation to re-appear in a number of oil products markets," the International Energy Agency said in the report.
Global demand growth for crude in 2015 has been revised upwards and is estimated to be 1.4 million b/d higher than the prior year, at 94 million b/d. That's twice the rate of growth averaged in 2014, and 300,000 b/d higher than the IEA forecast last month.
Non-OECD crude demand has grown by 1 million b/d year on year in 2015's first half, the IEA said, while non-OECD refinery runs gained an estimated 300,000 b/d over the same period. The IEA cited delays at the Yanbu, Ruwais, Paradip, Cartagena and Abreu e Lima plants.
"In contrast, OECD demand has grown more slowly -- by about 600,000 b/d -- but runs have surged by an estimated 1.1 million b/d as refiners have sought to not only meet local demand but also ship products to far-flung market outlets," the report added.
Global April refinery runs at 77.9 million b/d were up 1.7 million b/d year on year but 300,000 b/d lower than the prior month. In Europe, runs in June are seen at 11.8 million b/d, after peaking at 12.2 million b/d in February. Last month's refinery runs in Spain were the highest since at least January 2004.
Refining margins for a complex refinery in northwest Europe using Brent crude reached $8.82 bbl for the week ending June 5, the highest since the first week of April. For the Mediterranean, margins were at $10.25/bbl based on Es Sider crude, the highest since the last week of March, according to the IEA, citing
data from KBC Advanced Technologies.
April demand for diesel in OECD Europe climbed 2.1% year on year, while jet fuel gained 4.3%. Demand for gasoil was 2.2% higher. Rises were attributed to colder-than-year-earlier winter conditions and lower retail prices.