By JENNY GROSS
Refinery runs across the globe will bounce back in the coming months as refineries return from heavy autumn maintenance and ramp up production even as profits on oil products fall, the International Energy Agency said Tuesday in a monthly report.
"Refining margins are doing really bad - they're really weak and negative for almost all regions, but we still expect throughputs to pick up from October lows as refineries come back from maintenance," said Toril Bosoni, a senior oil market analyst at the International Energy Agency.
"Also product stocks are low in Europe and China, so refiners are picking up despite the fact that they're not making money to rebuild stocks, and making sure there's enough product going into the winter season."
Refinery runs will rebound to 75.8 million bpd, or 1.2 million bpd higher than the year-earlier quarter, after relatively weak growth since April.
The Paris-based energy watchdog said that aside from returning capacity in developed countries after maintenance season, expected run increases in Asia following a weak October contributed to an improved outlook.
In particular, Hindustan Petroleum Corp.s Bathinda refinery in northern Punjab state is expected to restart at the end of the first quarter of 2012, Bosoni said.
The refinery has a capacity of 9.0 million tpy. Chinese refineries ramped up runs to record highs in November after steep falls in October.
That said, the IEA doesn't expect margins for refiners to pick up, even after they fell "from bad to worse in November." Seasonal improvement in prices of middle distillates, like diesel and gasoil, hasn't offset weaker gasoline prices and overall higher crude oil prices, the report said.
In addition, mild weather and "economic weakness" has meant that increased product supplies from refiners exiting turnarounds are seeing weak demand, the IEA said.
Even with November's deteriorating refinery margins, estimates for fourth-quarter refinery runs are largely unchanged at 75.1 million bpd, the report said. Higher refinery rates in China and Brazil in November made up for a slightly lower outlook for runs from developed countries.
US refining margins looked particularly weak, partly because of the deterioration of gasoline prices against rising crude oil prices, the report said.
The crack between gasoline and Light Louisiana sweet crude in the US fell to a discount for the first time since December 2008, the IEA said.
North American refiners in October saw the steepest fall in runs of any region. The declines were mostly due to seasonal trends, such as maintenance at BPs Carson refinery in California and Chevron Corp's Richmond refinery.
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