Winter is coming… so what?

摘要

Certainties, for refners, are thin on the ground these days. Oil markets still follow a seasonal cycle, with a driving demand peak in the northern hemisphere’s summer and a heating peak in its winter months. But the winter efect is much diminished over recent decades and the efect of a second, or third, wave of Covid-19 infections makes it largely moot this year. Simply put, the impact on refning margins from extra heating demand will be dwarfed this winter by the overall drop in middle distillate demand from the pandemic and the large stocks cushion that has built up since March. Refners used to rely on the northern hemisphere winter to provide around a 4pc bump to global oil demand in the fourth quarter. Large heating oil markets in northern Europe — notably Germany — and the northeast US, as well as heating kerosine markets in northeast Asia, guaranteed that refners would be able to increase runs to 90pc of capacity or more after autumn maintenance. But the pool of demand for middle distillate heating fuels has greatly shrunk with the spread of natural gas supply, either piped or shipped in liquefed form to con-sumer nations, and the relentless warming of the globe through human-made emissions. What used to be a 2.5mn b/d oil demand increase in the fourth quarter is now barely registering any change from the third quarter.