Petroleum refiners around the world in October saw some of the largest month-to-month declines in refining margins since 2010 even as global refining crude throughputs are expected to rise to record levels in December, the International Energy Agency said Tuesday.
In its latest monthly Oil Market Report, IEA said refining margins in October fell by about $11/bbl from September levels on the U.S. Gulf Coast, by $7 to $9/bbl in Europe and by $4 to $6/bbl in Singapore.
Since 2010, only July and November 2022 saw larger month-to-month declines for most markets, the agency said.
“Ostensibly, the late-September collapse in gasoline cracks drove much of the weaker margin environment, but so too, declines in middle distillate cracks of $5-6/bbl compounded the impact of gasoline’s weakness,” IEA analysts wrote in the monthly report.
The weakness in gasoline margins was behind the Gulf Coast’s steep decline, as U.S. refineries run a slate of crude that has a higher percentage yield of gasoline than seen in other regions.
So far in 2023, U.S. refiners have seen the gasoline yield average 43%, compared to the 21% average year-to-date yield in Europe and the Singapore region.
The gasoline refining crack fell below $7/bbl in the Gulf Coast earlier this month, a level not seen since late 2020 and well below the $32.50/bbl average during the third quarter of this year.
“It seems likely that this collapse in gasoline cracks will pressure refineries to shift yields further in favour of gasoil/diesel which may depress VGO premiums to crude,” the IEA analysts wrote.
Despite the low refining margins, IEA expects global refining crude throughputs to rise to 84.2 million b/d by December, which would be a new annual peak and substantially higher than the average 81 million b/d seen in October.
IEA forecasts crude runs will average 82.6 million b/d in 2023 and 83.6 million b/d in 2024. Both are about 160,000 b/d higher than the agency had previously forecast.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
–Reporting by Steve Cronin, [email protected]; Editing by Michael Kelly, [email protected]
Read the full article here