Europe refinery runs fell in June amid global rise: IEA

Global refinery crude throughputs increased in June by the largest monthly level in almost a year, according to the IEA, although Europe was an outlier region and a relatively prolonged period of rising margins came to an end.

In latest monthly Oil Market Report, published today, the IEA estimated that global refinery throughputs rose by 1.6mn b/d month-on-month in June, the largest monthly increase since July 2020. But European OECD countries bucked the trend, as throughputs fell to 10.3mn b/d from 10.6mn b/d in May.

That suggests a European utilisation rate in the range of 65-70pc, which tallies with recent preliminary Euroilstock data on crude intake in the EU-15 and Norway that suggested utilisation at around 69pc in June. The IEA assumes that the heaviest part of the European refinery maintenance season occurred in June.

European OECD throughputs remained lower in June than the 2020 average, by contrast with the Americas where they have climbed almost back to the 2019 average. In China, they already far exceed the 2019 average.

China's crude throughputs have permanently eclipsed those in Europe, the IEA said. They overtook in 2019 and the agency said it expects China to hold that lead indefinitely, because it does not see European throughputs returning to pre-pandemic levels.

The IEA attributed the global correction in product cracks last month to the global rise in refinery throughputs, and to higher crude prices.

In Europe, Argus-assessed French diesel margins to North Sea Dated crude gave up gains early in June to drop to a three-and-a-half month low of $4.50/bl by the start of July. Europe was oversupplied with diesel from east of Suez and the US, reflecting rising output in those regions.

Although several European refineries returned from maintenance in June others were still in turnaround, including ExxonMobil's 270,000 b/d Fawley, in the UK, and BP's 265,000 b/d Gelsenkirchen, in Germany. Klesch began maintenance at its 100,000 b/d Heide refinery in Germany last month.

The IEA forecasts a 540,000 b/d third-quarter throughput increase in European OECD countries compared with the second quarter, pointing to the units that Spanish integrated Repsol has restarted and to TotalEnergies bringing back online a crude distillation unit (CDU) at its 240,000 b/d Gonfreville refinery in France.

But regional throughputs would remain far below 2019 averages, partly because of the permanent closures and conversions of refineries like TotalEnergies' 93,000 b/d Grandpuits in France and Galp's 110,000 b/d Porto, in Portugal.

European OECD countries built oil product stocks by around 1.4mn bl in May, the IEA said. This was counter-seasonal, as was the fall in crude throughputs. Typically, product stocks are drawn down by 1.9mn bl in May. In the OECD as a whole, product stocks increased but by closer to the seasonal norm.

European OECD countries' overall oil demand rose by an estimated 690,000 b/d in June, the IEA said, as Covid-19 lockdown restrictions were eased.

By Benedict George