Atlantic Basin Stockwatch Report October 2009
Summary:
Key Take Away: Perceptions will deter refiners from cutting runs enough to keep margins from collapsing. This spells disaster for simple refiners, especially the 3.3 million b/d of at-risk capacity in Europe.
Supply/Demand Fundamentals: Weak Products Demand Steep Cuts
High distillate stocks and anticipated heating oil weakness send a strong bearish signal over the next six months, echoing the message about weak fundamentals in ESAI’s Global Crude Outlook. This trend is reinforced by seasonal weakness of gasoline and softening fuel oil. Strong throughput cuts on both sides of the Atlantic are necessary to stabilize refining margins.
Perceptions: Winter to Rescue Distillate?
The seasonal trends of month-on-month stock draws and heating oil demand growth will delay the collapse of distillate margins. The reality of bearish distillate fundamentals will only truly set in once prospects for a winter demand spike fade. In the near term, this inclination will support margins and discourage refiners from making the required deeper throughput cuts.
In this issue:
- Atlantic Basin Price
- Forecast
- Refining
- Gasoline
- Distillates
- Fuel Oil
For more information, contact Soner Kanlier at skanlier@esai.com or 781-245-2036.