Our Refining Views report series provides a comprehensive understanding of the global refining industry and petroleum product markets. At the centre of our analysis is an industry-leading, state-of-the-art propriety refining model that allows our analysts to properly differentiate between regions, refining setups, and relevant crude oil baskets.
In this weekly report, we analyse the underlying complexities of the global refining market, presenting product-by-product updates for key regions: East of Suez, Americas, and the wider European region including the Former Soviet Union and Africa.
- Analysis of weekly movements in petroleum product crack spreads including a short-term outlook, informed by arbitrage calculations, refinery maintenance updates and secondary processing unit margins.
- Weekly updates to benchmark refining margins for each region using our proprietary in-house refining model.
The Time for Middle Distillates Has Come
After a month of reduced flows, we explore the possibilities of a pick-up in VGO arb opportunities from Europe to the US.
Refiners are currently enjoying their highest margins since 2019. The Hurricane-related refinery outages in the US helped prolong the gasoline rally but, with winter around the corner, it now looks as if the focus on gasoline production over the past few months, combined with a refusal to ramp up runs for fear of another wave of virus-related mobility reductions, has left global diesel inventories at seasonally low levels. Add to this the potential for extra requirements from power utilities as well as a continued economic recovery, and there is a clear upside case for diesel cracks to be made.
Rising energy costs offset by improving product values
Refining Outlook is an extensive quarterly publication that offers clients an excellent synopsis of the latest and projected developments on global petroleum products and refining markets in two parts.
- Part one investigates the general market conditions concentrating on the economy, supply and demand, inventories, freight, regulatory changes, and emissions.
- Part two presents a detailed petroleum product-by-product outlook for the next quarter including outlooks for refinery maintenance and upcoming expansions.
- Also includes data compilations of our balance figures, refinery maintenance and refining capacity additions.
The sentiment improves but there are still plenty of bearish factors to look out for
While oil demand is staging its long-awaited recovery, fresh capacity additions are still largely offsetting the losses made due to refinery consolidation. On the crude side, strong OPEC+ commitment remains the key driving force behind price action, though US supply is coming in stronger than expected.
This year started on a sour note, but optimism picks up
After the challenging 2020 2021 offers some relief for the global refining system, but too much optimism is premature at this stage.