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
"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
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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