Oil demand skyrockets | Rigzone
Fuel consumption is skyrocketing around the world, and with millions of barrels of daily refining capacity offline, refiners still in the game are reaping some of their biggest margins in years.
Globally, about 2.3 million barrels per day of refining capacity has been shut down during the pandemic and an additional 1 million barrels are expected to be shut down next year, Facts Global Energy analyst Steve said. Sawyer. This is just when demand is returning to pre-pandemic levels. Demand for fuel is skyrocketing as cars once again block roads and the switch from gas to oil accelerates ahead of winter.
As a result, refiners are enjoying sizable margins – a welcome change after a tough 2020 trading above $ 16 a barrel on Thursday, the highest since 2017, depending on the season. Margins are also increasing in Asia and Europe, where coal and natural gas shortages bolster the outlook for diesel, kerosene and propane demand before winter.
Rising margins indicate that demand for crude oil will remain strong as refiners continue to process more to meet consumption needs. This could mean that global oil stocks will continue to decline over the next few months. Global gasoline balances are expected to tighten significantly in November and December, according to Energy Aspects.
U.S. margins are also supported by seasonal refinery maintenance and a wave of weather-related outages, most recently the flooding that followed after the San Francisco area experienced torrential rains earlier this week. The flooding pushed retail gasoline prices in San Francisco to an all-time high of $ 4.75 a gallon on Thursday, according to GasBuddy.
In Europe, refiners have made better profits on gasoline, in part because demand for transportation has exceeded pre-pandemic levels. Italian gasoline demand in September was above 2019 levels while French gasoline consumption is improving faster than diesel.
Rotterdam’s gasoline premium over Brent crude, or crack, rose in October to its highest seasonal level since data going back to 2018.
Profits for Asian refiners have reached pre-pandemic levels as fuels processor China slashed exports of petroleum products amid its own energy shortage, increasing transportation fuel margins in the area before a winter that may require more heating fuels.
Additionally, demand for road fuels rebounds with traffic returning from Vietnam to Malaysia and Australia during the first half of October, as mobility restrictions caused by viruses eased, figures show compiled by Apple Inc. Refining margins in Singapore are seasonally highest since 2018.
“China’s energy crisis is reducing gasoline and diesel exports both to and from the region just as countries are emerging from Covid lockdowns and demand for both is rebounding,” Sawyer said.
To be sure, the electricity crisis is reducing profits for refiners who rely heavily on diesel production due to soaring natural gas costs.
Diesel margins in Europe are not as high seasonally. And most margin estimates don’t include energy and hydrogen costs, which are skyrocketing as natural gas prices in the region have skyrocketed. Hydrogen is particularly important in units known as hydrocrackers, the large diesel-powered machines that have traditionally been the profit centers of refineries in the region.
–With help from Saket Sundria.
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Elizabeth Low in Singapore at firstname.lastname@example.org
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