Wednesday, August 26, 2015

Gasoline Glut To Hit Refiners: Wood Mackenzie (CRAK)

I knew it!
As soon as a refinery ETF rolls out...
From Oil & Gas Financial Journal:
Wood Mackenzie’s latest long-term oil products market forecast shows that a surplus of gasoline is expected to flood the market as early as 2017, which, combined with a deficit of middle distillate and fuel oil, will put significant pressure on refiners by the end of the decade.

The global research and consulting firm says this will mark a turning point for the refining industry, which is currently struggling to meet gasoline demand growth of approximately 420 thousand barrels per day (kb/d), thanks to refinery outages in Latin America and the delayed ramp-up of new facilities in the Middle East.
As a result, the oil products market has remained tight and refiners are enjoying healthy margins, aided by low oil prices, which have helped to reduce costs.

However, in the longer term, Wood Mackenzie says it expects global oil demand growth to slow, lowering gasoline demand, thanks to increasing efficiency and alternative fuel sources. In particular, there will be strong growth in liquefied petroleum gas (LPG) supply from natural gas liquids (NGLS) in North America and the Middle East, causing margins to bottom out at minimum sustainable levels for Europe and Asia by 2019.

Furthermore, the ramp-up of three new refineries in the Middle East (which together will add 1.2 million barrels per day (mb/d) in capacity), plus the stabilization of operations in Venezuela, could compound any prolonged period of oversupply....MORE

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