Can The Global Refinery Runs Keep Up With Demand?

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Global refinery runs rose in June as maintenance wound down, but a number of outages and tight spare capacity outside of China meant they failed to keep up with the seasonal increase in demand, the International Energy Agency said in its latest monthly report released July 13, reports SP Global.

Refinery activity

Outages and incidents affected a number of refineries in Europe recently, including Austria’s Schwechat, Norway’s Mongstad, the UK’s Fawley, France’s Donges and TotalEnergies’ Antwerp in Belgium, S&P Global Commodity Insights reported.

Global runs are expected to hit a 2022 peak of 82.2 million b/d in August, which could help replenish inventories “before the usual fourth-quarter stock draws,” the IEA said.

Refinery activity, despite high utilization rates in the US and India, will remain constrained by a lack of operable spare capacity as well as capped runs in China. Chinese refinery runs in 2022 are forecast to decline by 460,000 b/d.

Russian refinery throughput in June rose by 420,000 b/d, “its highest since February when the invasion of Ukraine was launched,” the IEA said.

Russian refinery runs bottomed out in April and started climbing in May, according to S&P Global.

Product cracks

Most product cracks fell from daily records seen in May, although the June monthly average cracks were substantially higher month on month, the IEA said.

US gasoline cracks eased “due to higher refinery output combined with a seasonal fall in gasoline demand after the Memorial Day weekend,” it said.

In Europe, lower gasoline cracks were driven by higher crude prices, the IEA said.

Jet cracks in Europe were overtaken by diesel, whereas naphtha cracks in Europe and Singapore fell to new historical lows, the IEA said.

The lower naphtha cracks affected light sweet hydroskimming margins in Europe, the IEA said.

According to S&P Global, refining margins in Europe softened from recent highs due to weaker gasoline and distillate cracks, yet both gasoline and distillate cracks remained elevated compared with historical levels.

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Source: SP Global

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