IEA revises up 2022 global refinery runs forecast
The IEA has revised up its 2022 forecast for global refinery runs to within 400,000 b/d of pre-Covid levels.
In its latest Oil Market Report (OMR), the IEA said it expects global throughput to average 81.2mn b/d this year, up by 100,000 b/d from its previous forecast and 3.6mn b/d higher than last year. Runs averaged 81.6mn b/d in the pre-crisis year of 2019.
The 2021 estimate has been revised up by 300,000 b/d from the previous OMR to 77.6mn b/d, driven by a near 1mn b/d upwards adjustment to the November figure. The IEA estimates that throughput rose from 78.3mn b/d in October to 80.8mn b/d in November before dipping to 80.3mn b/d in December mostly because of a slowdown in Chinese activity.
"The global refining industry ended 2021 on a high note, with both processing rates and margins improving amid continuously tight product markets in 4Q21," the IEA said.
Global refining capacity contracted in 2021 for the first time in 30 years, falling by 730,000 b/d, the agency estimates. Almost 1.6mn b/d of capacity was closed or converted into biorefineries, while just 850,000 b/d of new capacity came online, it said. Europe is among the regions shedding the most capacity as its older refineries struggle to compete with Middle East and Asian counterparts on costs. Refineries in Portugal, Norway and Finland closed permanently in 2021.
The IEA forecasts refinery throughput in OECD Europe will average 11.4mn b/d in 2022, well below the 12.2mn b/d of 2019, reflecting the deep cuts to capacity in that region. It attributes the strong refining margins observed around the world in late 2021 partly to this cull in capacity and points to multi-year high refined product margins in Singapore and Europe at the end of the year.
European diesel prices hit a Covid-era high premium to the North Sea Dated crude benchmark in October last year, while jet fuel margins surpassed diesel on a per barrel basis for the first time during the pandemic in December. European gasoline premiums to crude reached a four-year high in November.
The refineries that fared best as 2021 went on were distillate-oriented and were located around Europe and Singapore, whereas gasoline-oriented refineries in the US faced deteriorating margins. Global refinery capacity is expected to rise by 1.2mn b/d in the coming year, which will help support growth in throughput.
Related news posts
Saudi Aramco cuts official August crude prices for Asia
Saudi Aramco cuts official August crude prices for Asia
London, 4 July (Argus) — Saudi Arabia's state-controlled Saudi Aramco has reduced the official formula prices of August-loading crude exports for buyers in its core Asia-Pacific market, while increasing prices for European customers. For customers in Asia-Pacific, Aramco has cut the August formula prices of its Arab Light and Extra Light grades by 60¢/bl compared with July and reduced the prices of its other grades by 20-70¢/bl. The price cuts for Asia-Pacific are within customers' expectations. Refiners in the region expected a narrower Dubai backwardation to prompt a reduction in Saudi formula prices . The month-on-month change in Dubai intermonth spreads is one factor that producers such as Aramco consider when setting the formula prices for their Asia-bound cargoes. For customers in northwest Europe, Aramco has raised the official August prices of its Extra Light, Arab Light, Arab Medium and Arab Heavy grades by 90¢/bl. For Mediterranean-bound exports of the same grades, it increased prices by 90¢/bl on a fob Ras Tanura basis and by 80¢/bl a fob Sidi Kerir basis. European refiners were anticipating an increase in Saudi formula prices on the back of firm values for rival crudes and tighter global supply. The North Sea's largest crude grade, Norway's medium sour Johan Sverdrup, averaged $1.60/bl above the North Sea Dated benchmark fob Mongstad in June, up from a $0.29/bl premium in May. Values of heavier grades in Europe have recently begun to improve. The Argus Brent Sour Index, which prices northwest Europe's heavier and sourer crudes, has averaged a 35¢/bl premium to Dated so far this week. The index averaged 10¢/bl above Dated in June and 7¢/bl below the benchmark in May. Aramco is expected to export less crude in the summer months when domestic demand peaks. Saudi Arabia announced in early June that it will extend a 1mn b/d "voluntary" additional crude output cut — first implemented in July 2023 — for three months until the end of September. For customers in the US, Aramco has lifted the August formula prices of Extra Light and Arab Light by 10¢/bl compared with July. It has left formula prices of the other grades unchanged. By Edmundo Alfaro and Lina Bulyk Saudi Aramco official formula prices $/bl August July ± United States (vs ASCI) Extra Light 7.10 7.00 0.10 Arab Light 4.85 4.75 0.10 Arab Medium 5.45 5.45 0.00 Arab Heavy 5.10 5.10 0.00 Northwest Europe (vs Ice Brent) Extra Light 5.60 4.70 0.90 Arab Light 4.00 3.10 0.90 Arab Medium 3.20 2.30 0.90 Arab Heavy 0.80 -0.10 0.90 Asia-Pacific (vs Oman/Dubai) Super Light 2.75 2.95 -0.20 Extra Light 1.60 2.20 -0.60 Arab Light 1.80 2.40 -0.60 Arab Medium 1.25 1.95 -0.70 Arab Heavy 0.50 1.20 -0.70 Mediterranean fob Ras Tanura (vs Ice Brent) Extra Light 5.60 4.70 0.90 Arab Light 3.90 3.00 0.90 Arab Medium 3.30 2.40 0.90 Arab Heavy 0.60 -0.30 0.90 Mediterranean fob Sidi Kerir (vs Ice Brent) Extra Light 5.65 4.85 0.80 Arab Light 3.95 3.15 0.80 Arab Medium 3.35 2.55 0.80 Arab Heavy 0.65 -0.15 0.80 Source: Saudi Aramco Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Hengyuan's Malaysian refinery completes LRCCU repairs
Hengyuan's Malaysian refinery completes LRCCU repairs
Singapore, 4 July (Argus) — China-based independent Hengyuan Refining (HRC) has completed repairs at the long residue catalytic cracking unit (LRCCU) at its Malaysian 156,000 b/d Port Dickson refinery on 30 June. The LRCCU was shut after a leakage at a carbon monoxide boiler on 19 June. It is a gasoline production unit and typically uses residual fuel as a feedstock to produce full-range catalytic cracked gasoline (CCG). Inspection activities for HRC's hydrogen manufacturing unit and Euro4Mogas facilities were also complete. The refinery has restarted the units and is "recovering to its normal operational level", said HRC. The LRCCU issue had prompted HRC to offer rare and prompt straight-run fuel oil cargoes, and buy gasoline cargoes for June and July loading. The Port Dickson refinery houses two crude distillation units, a LRCCU, two naphtha treaters, a merox plan, two reformers and a gasoil treatment plant. Approximately 85pc of its oil products are sold domestically in Malaysia. By Aldric Chew Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Upper Mississippi locks closed by high water
Upper Mississippi locks closed by high water
Houston, 3 July (Argus) — High water levels on the upper Mississippi River have caused several lock closures and spurred delays for barge carriers. Lock and Dams (L&D) 12, 16 and 17 on the upper Mississippi River closed 2 July and are expected to remain closed through the rest of this week and possibly into the next, according to the US Army Corps of Engineers. Locks 11, 13, 18 and 20 are expected to close on 4 July. The Corps will likely close locks 14 and 22 on 5 July, while lock 15 is expected to close 6 July. The Corps said the duration of the July 4-5 closures is unclear. Another 2-5 inches of rain fell along the western Corn Belt in the past week, according to the National Oceanic and Atmospheric Administration. High river conditions led to major flood status at Dubuque, Iowa, while other locations along the river are at moderate flooding levels. Water levels are 4-5ft below record highs on the upper Mississippi River. The outdraft at lock and dam 16 was at 211,444 cubic feet per second (cfs) on Tuesday, compared with typical flow of 41,100cfs. Major barge carrier American Commercial Barge Line anticipates 7-10 days of disruption followed by a 2-3 week catch-up. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US services contract in June, signal broad weakening
US services contract in June, signal broad weakening
Houston, 3 July (Argus) — Economic activity in the US services sector contracted in June by the most since 2020 while a report earlier this week showed contraction in manufacturing, signaling a broad-based slowdown in the economy as the second quarter came to an end. The Institute for Supply Management's (ISM) services purchasing managers index (PMI) registered 48.8 in June, down from 53.8 in May. Readings above 50 signal expansion, while those below 50 signal contraction for the services economy. The June services PMI "indicates the overall economy is contracting for the first time in 17 months," ISM said. "The decrease in the composite index in June is a result of notably lower business activity, a contraction in new orders for the second time since May 2020 and continued contraction in employment." The business activity/production index fell to 49.6 from 61.2. New orders fell by 6.8 points to 47.3. Employment fell by 1 point to 46.1. Monthly PMI reports can be volatile, but a services PMI above 49 over time generally indicates an expansion of the overall economy. "Survey respondents report that in general, business is flat or lower, and although inflation is easing, some commodities have significantly higher costs," ISM said. The prices index fell by 1.8 points to 56.3, showing slowing but robust price gains. ISM's manufacturing PMI fell to 48.5 in June from 48.7 in May, ISM reported on 1 July. It was the third consecutive month of contraction and marked a 19th month of contraction in the past 20 months. Wednesday's weaker than expected ISM report, together with a Wednesday report showing initial jobless claims last week rose to their highest in two years, slightly increase the odds that the Federal Reserve may lower its target rate later this year after maintaining it at 23-year highs since last year in an effort to stem inflation. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more