The Organization of the Petroleum Exporting Countries in its June Monthly Oil Market Report (MOMR) said that a product glut and higher feedstock prices pushed refinery margins to record-breaking lows. The manufacturing, freight, and distribution systems are still operating at lower rates. The relaxation in coronavirus-related restrictions has provided support to gasoline markets, but it remains insufficient to prevent the significant downturn in refining economics.
In the US, refining margins tumbled to the lowest since February 2016. US gasoline markets have shown signs of improvement but are still relatively weaker compared to past figures. The gap between US refinery margins and WT averaged $4.92/barrel in May, $7.00 lower than a month earlier and $14.70 lower than a year earlier. US refinery utilization rates increased by 0.5 percentage points from April to 70.3% in May but remained 20.3 percentage points lower compared to a year earlier. Crude throughput fell by 3.5 million bpd year-on-year to 13.34 million bpd.
In Europe, refinery margins for Brent averaged 85¢/barrel in May, down by $4.70 month-on-month and by $6.51 year-on-year. The margins were at a new record-breaking low amid healthy product supply which weighed on markets. The region’s refinery utilization rates dropped by 1.7 percentage points month-on-month to an average of 68.16% in May, 12.1 percentage points lower than a year-ago level. Meanwhile, throughput decreased by 1.4 million bpd, year-on-year to 8.45 million bpd.
Asian refiners also faced challenges, with refinery margins for Oman plunged to minus $3.72/barrel in May, declining by $1.63 month-on-month and by $7.67 year-on-year. Combined refinery utilization rates in Japan, China, India, Singapore, and South Korea stood at 79.57% in May, down by 0.1 percentage points from the previous month and by 6.1 percentage points from a year earlier. Crude throughput declined by 2.4 million bpd year-on-year to 22.54 million bpd.
