Refiners are on track to increase output this year, the IEA said today, but refining activity is diverging considerably by geography.
Global refinery runs are set to rise by 1.7mn b/d to 82.4mn b/d this year, unchanged compared with the last IEA Oil Market Report (OMR).
Chinese refinery output surged to 15.5mn b/d in August, up by 2.6mn b/d on the year and marking a new record. By contrast, OECD Europe's refining activity fell by 370,000 b/d year on year to 11.49mn b/d, as refinery utilisation rates slumped by 2pc on the year to 84pc. Germany and Italy recorded utilisation rates below 80pc.
OECD Americas runs rose by 320,000 b/d on the year to 19.5mn b/d in August. US refinery activity was supported by the lack of weather-related disturbances and a low number of unplanned outages. Mexican utilisation rates stood at just 50pc.
Global crude processing rates were still below August 2019 levels of 84.5mnb/d, signalling an incomplete post-pandemic recovery in refining activity.
The OECD energy watchdog expects global refinery runs to increase by 1mn b/d to 83.4mn b/d next year, down from its 83.6mn b/d forecast last month. The 130,000 b/d reduction in refinery output growth comes as the IEA pointed to a delay in the start-up of the 650,000 b/d Dangote refinery in Nigeria and Mexico's state-owned Pemex 340,000 b/d Olmeca refinery to 2024 and 2025, respectively.
Refinery margins slump
Global refinery margins fell in September from August levels, mostly as a result of a decrease in gasoline and fuel oil crack values. But strong diesel and jet fuel cracks supported global refinery margins above seasonal averages.
September hydroskimming margins in Northwest European fell by $2.61/bl on the month to $12.36/bl. Gasoline and fuel oil cracks saw the steepest month-on-month fall among oil products. Gasoline margins were assessed at $20.96/bl in September, down by $9.70/bl from August.
The IEA said gasoline supply concerns eased as US gasoline inventories returned to above average levels following recent flooding in the US Northeast, a less active hurricane season, and robust production rates in September. The transition to winter specification gasoline is also allowing cheaper blending components to be included in gasoline grades.
High-sulphur fuel oil (HSFO) and 0.5pc fuel oil margins were marked at discounts of $5.03/bl and $1.38/bl — down by $4.05/bl and $5.10/bl, respectively.
Diesel margins were an outlier in September as they were the only product cracks to register a month-on-month rise in Northwest Europe. Diesel cracks rose by $1.43/bl to $37.77/bl in September, as the IEA pointed to a "knee-jerk" reaction to Moscow's diesel export ban introduced on 21 September.
Jet margins fell at a slower pace to $37.47/bl, down by 62¢/bl from August. But jet cracks are likely to find support from scheduled refinery maintenance in Europe and the US, while jet demand will rise as it is blended into the diesel pool to match winter specification diesel grades, the IEA added.
