Caused by the demand decline from the economic dislocations of the coronavirus outbreak, Asia Pacific oil refineries are finding that processing cuts are not keeping pace with sharp drops in fuel margins.
Asian refineries will cut their processing by between 2 million to 4 million bpd in April, analysts at Wood Mackenzie, JBC Energy, Energy Aspects, Rystad Energy, IHS Markit and FGE estimate. The cuts will average between 2 million to 2.7 million bpd for the whole Q2, according to the analysts.
Product oversupply will continue in the near future as there’s just been too big of a demand loss while refineries scramble to cut runs to catch up with the massive demand losses, analyst at Energy Aspects said.
Amid a global oil demand contraction, the Asian cuts are occurring. Lockdowns to contain the spread of coronavirus wreak havoc on the consumption of gasoline, diesel and jet fuel. While refiners have cut runs by 14.1 million bpd year-on-year, a senior oil analyst at Rystad Energy said the total product demand estimation is globally down by 22.5 million bpd year-on-year for April.
Besides reducing intake in April, Indonesia and Australia are also planning run cuts at their refineries. Despite poor margins and deepened refinery run cuts to cope with a fuel supply surge, India at the same time has ramped up fuel exports. From a year earlier, Australia’s import of gasoline and diesel could slump by as much as 150,000 bpd in April.
