Europe’s biggest refiner, Total reported that its average refining margin fell to its lowest in six years during the second quarter of 2020, dragged by recovering oil prices while fuel demand remained sluggish due to the coronavirus-related lockdown.
The company’s “variable cost margin” for its European refineries dropped to $14.30/ton or about $1.95/barrel in Q2, the lowest since $10.90/ton in Q2 2014. This is also compared to $26.30/ton margin in Q1 and $27.60/ton in the same quarter in 2019.
Virus containment measures have depressed global fuel demand and pushed European refining margins to fall sharply since March. Statistics from the International Energy Agency showed that in May, Brent cracking margin In Northwest Europe fell to negative territory for the first time on a monthly basis since 2006.
Total’s CEO Patrick Pouyanne said that the company’s refineries would likely to operate at 70% of capacity in 2020, declining by 15 percentage points from last year’s average. This is expected to impact Total’s refining cash flow, he added.
