The International Energy Agency said global oil refining production could start rebounding in June. However, due to rising crude prices as producers slashed output much faster than expected, refiners’ margins may be squeezed.
As the coronavirus pandemic cut fuel demand by 30 percent, refiners throttled back output globally. Crude prices crashed, prompting the OPEC+ to cut oil output by 9.7 million bpd. Output also has been reduced by other nations.
If crude supply adjusts more quickly to the oversupply than forecast, crude prices will be supported and refinery margins depressed. The output will be cut more than originally pledged, several OPEC nations in recent days said. Much faster than expected, production has been cut by 1.7 million bpd by producers in the US and Canada.
In reaction to global lockdowns, oil demand in April slumped by around 25 percent, or more than 25 million bpd, IEA said. Refining capacity use in the US fell to 68 percent in the most recent week, just off an all-time low.
