Strong refining margins in much of the world are likely to prove more of a mirage than a firm feature going forward. Margins in the Asia-Pacific region and Europe are expected to drop, potentially significantly, in the second half of this year. Some analysts believe that the gathering trend is also downward, with Asian margins likely to be under pressure for the next few years. The immediate threats this year are coming from 1.1 million barrels per day of new refining capacity in the Mideast and India on the one hand and hedging strategies in Europe that could deepen the decline on the other. In the short term, Asian refining margins are likely to receive support from the turnaround season, starting now and set to continue for several months, plus strong product demand, thanks to low oil prices. But margins are expected to fall significantly once the support from turnarounds comes to an end. Benchmark Singapore refining margins could drop to a range of $5/bbl to $6/bbl in the second half of the year, according to consultancy Wood Mackenzie, marking a major drop from around $8/bbl in March. And unless crude prices tumble further, or oil product demand picks up strongly, East of Suez margins are likely to be under pressure for several years, some analysts say. Over time, prolonged low margins will reduce runs, cut into crude demand and increase the pressures on some refineries in Asia and Europe to close down.
展开▼
