Refiners around the world may cut operating rates in the coming months, reducing crude oil demand, because of ``poor'' margins, the Organization of Petroleum Exporting Countries said.
``The recent strong builds in gasoline stocks in the U.S. and elsewhere should cause the poor performance of refinery economics and encourage refiners to trim crude demand and refinery throughputs,'' Organization of Petroleum Exporting Countries said today in its monthly report.
Refiners using Brent in their plants in northwest Europe earned 21 cents a barrel yesterday, compared with $4.65 a barrel on Feb. 21, according to data compiled by Bloomberg. The decline in refining margins, or the profit from turning a barrel of oil into fuels such as gasoline and diesel, reflects the failure of product prices to keep pace with rising crude.
``A combination of slowing demand for middle distillates, gasoline stocks building across the globe, especially in the U.S., and high crude oil prices may limit the impact of seasonal refinery turnarounds on refining margins in the coming months,'' analysts including Safar Keramati said in the report.
Brent crude for April settlement climbed to a record $107.88 a barrel yesterday on London's ICE Futures Europe Exchange. Gasoline for immediate loading in the Amsterdam-Rotterdam-Antwerp area rose $9 to $889 a metric ton at 11:39 a.m. U.K. time today, Bloomberg data show. That's $13 below the record $902 a ton reached on March 12.
Future Cuts
``The decline in the refining margins over the last few months negatively affected refining operations around the board, leading to early refinery maintenance, particularly in the Western Hemisphere,'' Organization of Petroleum Exporting Countries said. ``The current circumstances of the product markets and refining margins may encourage further discretionary cuts in the future,'' it said.
Last week, U.S. gasoline stockpiles rose for an 18th week to the highest since 1993, according to the Department of Energy. The refinery utilization rate in the U.S. fell 1.2 percent to 85.6 percent in February, Organization of Petroleum Exporting Countries said. In Europe, it dropped by 1.8 percent to 84.6 percent.
Maintenance in Europe in March is expected to cut 500,000 barrels a day of refining capacity from the European market, according to Vienna-based JBC Energy. That compares with 430,000 barrels in February and an estimated 420,000 barrels and 425,000 barrels in April and May respectively, JBC's Head of Research Ehsan Ul-Haq said Feb. 26.
``The recent strong builds in gasoline stocks in the U.S. and elsewhere should cause the poor performance of refinery economics and encourage refiners to trim crude demand and refinery throughputs,'' Organization of Petroleum Exporting Countries said today in its monthly report.
Refiners using Brent in their plants in northwest Europe earned 21 cents a barrel yesterday, compared with $4.65 a barrel on Feb. 21, according to data compiled by Bloomberg. The decline in refining margins, or the profit from turning a barrel of oil into fuels such as gasoline and diesel, reflects the failure of product prices to keep pace with rising crude.
``A combination of slowing demand for middle distillates, gasoline stocks building across the globe, especially in the U.S., and high crude oil prices may limit the impact of seasonal refinery turnarounds on refining margins in the coming months,'' analysts including Safar Keramati said in the report.
Brent crude for April settlement climbed to a record $107.88 a barrel yesterday on London's ICE Futures Europe Exchange. Gasoline for immediate loading in the Amsterdam-Rotterdam-Antwerp area rose $9 to $889 a metric ton at 11:39 a.m. U.K. time today, Bloomberg data show. That's $13 below the record $902 a ton reached on March 12.
Future Cuts
``The decline in the refining margins over the last few months negatively affected refining operations around the board, leading to early refinery maintenance, particularly in the Western Hemisphere,'' Organization of Petroleum Exporting Countries said. ``The current circumstances of the product markets and refining margins may encourage further discretionary cuts in the future,'' it said.
Last week, U.S. gasoline stockpiles rose for an 18th week to the highest since 1993, according to the Department of Energy. The refinery utilization rate in the U.S. fell 1.2 percent to 85.6 percent in February, Organization of Petroleum Exporting Countries said. In Europe, it dropped by 1.8 percent to 84.6 percent.
Maintenance in Europe in March is expected to cut 500,000 barrels a day of refining capacity from the European market, according to Vienna-based JBC Energy. That compares with 430,000 barrels in February and an estimated 420,000 barrels and 425,000 barrels in April and May respectively, JBC's Head of Research Ehsan Ul-Haq said Feb. 26.
Source: Bloomberg|By Nidaa Bakhsh
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