Refinery margins across the United States fell for the week ended Jan. 21 as gasoline demand weakened, according to an analysis from S&P Global Platts…
Jan 24, 2022
Refinery margins across the United States fell for the week ended Jan. 21 as gasoline demand weakened, according to an analysis from S&P Global Platts on Jan. 24, due in part to bad weather which kept drivers off the road.
According to data from GasBuddy, which tracks real-time fuel prices across the US, Canada and Australia, weekly total US gasoline demand fell 6.4% from the prior week and was 6.7% below the four-week rolling average.
“Demand destruction was expected as a larger winter storm boosted last week’s demand figure in the closing day of the period and caused a big early week drop in these demand figures,” said GasBuddy’s Patrick De Haan.
“Overall, total US demand last week was at its lowest since March 2021,” he added.
GasBuddy data showed the US Atlantic Coast had the biggest percentage decline in gasoline demand, falling 13.7% week on week.
Demand declines were reflected in lower margins. USAC cracking margins for Urals crude fell over $1 to average $9.01/b for the week ended Jan. 21, compared with $10.20/b the week earlier, according to S&P Global Platts Analytics data.
The lower cost of complying with the Environmental Protection Agency’s Renewable Fuel Standard also factored into weaker margins, averaging $3.24/b for the week ended Jan. 21 from $3.68/b the week earlier, Platts Analytics margin data showed.
Rising crude costs also cut into margins, with front-month Brent futures averaging $87.53 week ended Jan. 21 and front-month NYMEX crude futures averaging $85.88/b, the highest levels for both since October 2014.
Global refinery utilization is increasing as refinery downtime slows, increasing inventories of refined products. January global refinery downtime is expected to be about 9.3 million b/d, compared with the over 10 million b/d offline in December, according to S&P Global Platts Analytics.
US refinery downtime is also decreasing, with 2.4 million b/d offline in January 2022, down from 2.5 million b/d in December and 5 million b/d in November.
However, with the onset of spring seasonal maintenance, US refinery downtime in February is expected to be 2.7 million b/d and March downtime at 3 million b/d, Platts Analytics forecasts, with the US Gulf Coast bearing the brunt of the planned work.
“The downtime is seen among both independent and integrated refineries such as Holly Frontier, Exxon, Shell, Valero and Marathon,” Platts Analytics said in a research note.
Planned work beginning in the week ended Jan. 24 includes the gasoline-making complex at Valero’s 195,000 b/d McKee refinery in Sunray, Texas, according to a recent filing with the Texas Commission on Environmental Quality.
According to most recent weekly data from the US Energy Information Administration, USGC refinery utilization declined two percentage points to average 87.7% of capacity for the week ended Jan. 14.
EIA weekly data showed weekly US gasoline inventories, which stood at 246.6 million barrels for the week ended Jan. 14, were at the highest weekly level for almost a year on weaker demand and fewer exports.
Jan 10, 2022
Asia’s oil demand may finally be on a sustained upward trend after a long period of uneven growth, with consumption in China and India looking increasingly resilient, but how OPEC+ members plan their supply response will be crucial in supporting this recovery.
The maiden decision in 2022 by OPEC and its Russia-led partners to approve another hike in production quotas — betting the market can absorb more oil in the coming months despite surging COVID-19 infections — will be music to the ears of Asian oil importers witnessing a fragile economic revival.
“As we leave the worse days of the pandemic behind, the oil and gas market is already on a steady volume and price recovery mode since the historic lows in mid 2020 and in 2022,” Pankaj Kalra, CEO of Essar Exploration and Production Limited,” told S&P Global Platts.
According to Platts Analytics, Asian oil demand is projected to rise by 1.7 million b/d in 2022 and reach 103% of pre-pandemic levels, up from the 1.2 million b/d growth seen in 2021, although the full impact of the omicron variant of the coronavirus is still being assessed. Growth will be driven by middle distillate demand, which is expected to rise by 1.0 million b/d in 2022.
“Apart from China with zero-COVID policy, most countries in the region are moving toward re-opening of economies despite seeing a rise in omicron cases. Any lockdowns are likely to be localized and more targeted, with less impact on oil demand than in the past,” said Lim Jit Yang, advisor for Asia-Pacific oil markets at Platts Analytics.
Affirming a 400,000 b/d output increase for February on Jan. 4, the OPEC+ alliance signaled continued confidence that the omicron variant will have a smaller impact on global oil demand than previously assumed. Crude prices have so far proved resilient, hovering above $80/b.
The 23-country alliance, which controls about half of the global oil production capacity and instituted a record 9.7 million b/d cut during the market crash of spring 2020, has been gradually restoring output in 400,000 b/d monthly increments, aiming to regain pre-pandemic levels by late 2022.
“Whilst there might be a short-term blip in Q1 with China going in for harsh lockdown conditions and others like India, South Korea and ASEAN members implementing some level of restriction to their economy and to travel, the overall outlook for crude oil is encouraging,” said Rajat Kapoor, an oil & gas consultant and advisor based in Mumbai.
Asian countries are increasingly showing signs of robust demand recovery.
India’s crude imports in November reversed a declining trend to hit its highest level in 10 months as refiners built inventories in anticipation of higher runs. The country imported 18.37 million mt, or 4.5 million b/d, of crude in November, up 7.5% month on month, the latest provisional data from the country’s Petroleum Planning and Analysis Cell showed.
“China and India will resume their front-line status as the engines of growth in 2022, but Southeast Asia will also contribute substantially, especially in countries with high vaccination rates,” Platts Analytics said.
Refiners in South Korea and Japan were broadly cautiously optimistic that global oil demand recovery momentum would extend into 2022, with revival in the regional aviation industry holding the key to Asia’s full transportation fuel demand recovery to pre-pandemic levels.
Seven middle distillate marketers and distribution managers at five major South Korean and Japanese refiners — including Cosmo Oil, S-Oil Corp, ENOES — surveyed by Platts indicated that Asia’s jet fuel demand could recover to at least 70% of the pre-pandemic 2019 levels this year, which would ultimately lead to higher refinery runs, crude imports, as well as oil products output.
With gasoline and diesel consumption gradually catching up to the pre-pandemic levels, the South Korean refinery sources and fuel marketers said jet fuel is the one last missing puzzle.
South Korea, Asia’s fourth biggest oil consumer, saw its combined gasoline, diesel and jet fuel demand rise to an estimated 740,000 b/d in 2021 from 729,000 b/d in 2020, according to latest data from Korea National Oil Corp. However, the 2021 level remained below 804,000 b/d seen in 2019.
“Ultimately, if the full recovery in the aviation industry and jet fuel demand unfolds, this will likely put strong pressure on OPEC+ to raise the pace of the group’s crude production hike to cater to higher throughput and run rates across Asia,” said a senior crude and distillate fuels trader at S-Oil.
Asian refiners believe the global crude supply remains very tight and outright oil prices overheated. The end-users are continuing to call for the OPEC+ to raise supply by at least 800,000 b/d, doubling the producer group’s current stance to increase output by a modest 400,000 b/d.
Jan 24, 2022
Spain-based refinery operator Cepsa is to develop and produce sustainable aviation fuel from waste, recycled used oils, and other sustainable plant-based feedstocks with airline operator Iberia, the companies said Jan. 24.
The deal signed by Cepsa and Iberia Group will also see them look into other alternative energies such as renewable hydrogen and electricity with the aim of promoting sustainable mobility for aircraft and the fleet of airport ground vehicles. The companies did not disclose financial details or volumes.
The agreement is in line with the European Commission’s ‘Fit for 55’ climate package, which includes a legislative initiative called ‘RefuelEU Aviation’ that aims to boost the supply and demand of aviation biofuels in the EU to 2% use by 2025, 5% by 2030, and 63% by 2050, the companies said.
As part of London-based IAG Group, Iberia and Iberia Express have committed to achieving net zero emissions by 2050 and to operating a minimum of 10% of their flights with sustainably sourced fuels by 2030.
Cepsa, which operates 460,000 b/d of refining capacity in southern Spain, has been producing biofuels in its refineries for more than 10 years and is already engaged in research to convert waste and used oils into fuels from renewable sources with a high energy value.
“To decarbonize the aviation sector, the development, production, and distribution of sustainably sourced fuels at affordable prices and in sufficient quantity to supply airlines is essential. We are confident that this agreement with Cepsa will contribute to that goal,” Iberia chairman and CEO Javier Sanchez-Prieto said.
Compared to conventional fuel, SAF can reduce aviation emissions by up to 80% over conventional kerosene during its life cycle, according to the International Air Transport Association.
China’s independent refining sector is expected to consolidate further in 2022 as Beijing’s pledge to maintain supervision to ensure operational and tax discipline would see integrated refining…
Jan 06, 2022
China’s independent refining sector is expected to consolidate further in 2022 as Beijing’s pledge to maintain supervision to ensure operational and tax discipline would see integrated refining capacities increasingly replacing smaller players that are scattered across northern part of the country.
The expected decision by China to deny five of its independent refineries crude import quotas in the first round of allocations is a confirmation that the independent refiners are set to face the toughest crackdown since the sector was liberalized and was given access to imported crude in 2015.
Analysts told S&P Global Platts that integrated refining capacities have started to replace the small and scattered ones in the refining sector, as the country steps up efforts in phasing out less efficient refining capacities and replace them with relatively more modern, integrated and petrochemical-oriented capacity.
Before 2021, independent refiners have been finding ways to use policy loopholes. But since last year, the government has started to tighten supervision by launching investigations on the sector’s operations, taxation compliance and environmental responsibility.
Beijing has set a target to cap the country’s refining capacity at 100 million mt/year in 2025.
Beijing in 2022 took the first strong step by removing five independent refineries from the list of refiners eligible for crude import quotas in the first round of allocations.
“Removing them from the first batch of quota allocation means that these refineries are unlikely to import even a drop of crude with their own quota in 2022 until the second batch of allocation when they will look to meet the requirements for quotas, and it is a warning to quota trade which is illegal,” a Beijing-based analyst said.
The refineries left out in the first batch are Haiyou Petrochemical, Qingyuan Petrochemical, Qingyishan Petrochemical, Wonfull Petrochemical and Beifang Asphalt, which together had a combined crude import quota ceiling of 21.4 million mt/year in 2021.
Other than Beifang Asphalt in Liaoning province, the remaining four operating plants have been absent from the list since the second batch of allocation for 2021 in late June.
As a result, the refiners are only left with the option of buying domestically produced crudes, imported crude barrels from the domestic market as well as importing fuel oil and bitumen blends.
“This would boost their feedstock costs, compared with their peers, hurting their competitiveness,” a Singapore-based analyst said.
Moreover, quotas awarded to the state-owned ChemChina also saw a 29% decline to 8.56 million mt from the same round of last year, which was attributed to operation faults found in 2021.
“We expect more progress to be made on the collection of consumption taxes at the pump, some resolution of tax practices, and stricter policies aimed at shutting small and aged refineries permanently,” S&P Global Platts Analytics said in a report dated Dec. 16.
In contrast, greenfield integrated refiners are set to gain more than 35 million mt/year of additional quotas in 2022, with the 36 million mt/year new refining capacity in Zhejiang Petroleum & Chemical and Shenghong Petrochemical starting operations.
Currently, ZPC is running its 40 million mt/year plant at about 80% of the nameplate capacity, while the 16 million mt Shenghong plans to startup in late-January.
Their increased crude throughput would largely more than offset the reduction in runs at their relatively smaller independent peers, which are set to gain relatively lower volume of quotas this year, compared with last year.
Moreover, three independent refineries which shut in 2021, were also absent from the first batch of allocation for 2022, compared to 2021.
These refineries, with a combined capacity of 8 million mt/year, had been allowed to crack a total 7 million mt/year of imported crude oil, and are set to transfer their quota to the under-construction integrated 20 million mt/year Yulong Petrochemical in Shandong province, sources said.
In 2022, three more of such independent refineries, with a combined refining capacity of 7.4 million mt/year, are likely to shut and in turn transfer their crude import quotas amounting to 4.56 million mt/year, Platts data showed.
Since 2020, a total of 10 small Shandong-based independent refineries have been set to shut their 2.8 million mt/year capacity to transfer 13 million mt/year crude import quota to the upcoming Yulong Petrochemical.
In China, refineries built and operated by state-owned companies — CNOOC, PetroChina, Sinochem and Sinopec — do not need quotas to import crude. All other refineries, including independents and those owned and operated by state-owned companies such as ChemChina and Norinco, require quotas.
The phasing out of capacity is happening at refiners which are entirely oil products-oriented refiners, while the integrated refineries are being built keeping in mind a bigger petrochemicals portfolio.
“The shift is in line with China’s development plan and product rebalancing,” a Hong Kong-based analyst said.
China’s transportation fuels demand is expected to fall over coming years as EVs expand their market share, while railways and waterways continue to replace road transportation.
This would lead to combined consumption of gasoline, gasoil and jet fuel peaking at about 390 million mt/year around 2025 and fall to 60 million mt/year by 2060, according to a report released by China National Petroleum Corporation’s Economics & Technology Research Institute on Dec. 26.
A growing petrochemicals market is seen as a sector that would help to support China’s oil demand, despite fears of slowing consumption of transportation fuels.
In addition, Beijing has set its eyes to minimize oil product exports to control emissions. As a result, it has slashed the country’s export quotas allocation by 56% on the year in the first batch for 2022.
The role of price assessments in the refined products market A benchmark price is a standard reference point used by the industry to represent the…
Nov 08, 2021
A benchmark price is a standard reference point used by the industry to represent the current market value. This is a price you need to have confidence in as it regularly acts as a starting point for contract negotiations, procurement decisions and business planning. Having access to open, transparent pricing information helps you to mitigate risk exposure and help ensure your business retains a competitive edge.
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The pandemic interrupted a steady surge in global air travel demand, when passenger numbers tripled in just over 20 years. Jet fuel demand remains below…
Dec 13, 2021
The pandemic interrupted a steady surge in global air travel demand, when passenger numbers tripled in just over 20 years.
Jet fuel demand remains below pre-pandemic levels and is not expected to fully recover until late 2025 or 2026, according to S&P Global Platts Analytics. Yet the race is still on to limit aviation emissions growth because there are no quick fixes for decarbonizing this sector.
The International Energy Agency expects aviation emissions to be 12% above pre-pandemic levels in 2030, even if airlines and governments meet their announced sustainability goals.
Rep. Sean Casten, Democrat-Illinois, spoke with Platts senior editor Meghan Gordon about the policy outlook for sustainable aviation fuel, whether the US can meet the Biden administration’s supply and emission targets, and some of the challenges could stand in the way.
They spoke a day after Casten joined the CEOs of United Airlines and Marathon Oil, along with other officials, on the first passenger flight fueled by 100% SAF.
Stick around after the interview for Chris van Moessner with the Market Minute, a look at near-term oil market drivers.
This Capitol Crude podcast was produced by Meghan Gordon in Washington and Jennifer Pedrick in Houston.
On this week’s Platts Market Movers Asia with Associate Editor Joanne Ju: Surging retail gasoline and diesel prices are once again beginning to rattle Asian…
Jan 24, 2022
On this week’s Platts Market Movers Asia with Associate Editor Joanne Ju: Surging retail gasoline and diesel prices are once again beginning to rattle Asian consumers. (00:15)
Other highlights from Asia’s commodity markets:
*Asian thermal coal prices are rising due to tight supply (02:00)
*Spot LNG prices are under pressure ahead of the Lunar New Year (02:30)
*China’s soybean demand is expected to remain subdued amid weak crushing margins (03:13)
Vietnam’s 200,000 b/d Nghi Son refinery has slashed its operation rate to 80% of its capacity from around 110% previously due to financial difficulties, with…
Jan 25, 2022
Vietnam’s 200,000 b/d Nghi Son refinery has slashed its operation rate to 80% of its capacity from around 110% previously due to financial difficulties, with the country’s biggest refiner struggling to pay for feedstock Kuwaiti crude for January delivery, an official at Nghi Son Refinery and Petrochemical, or NSRP, said Jan. 25.
NSRP has suspended imports of crude oil for January arrival because it does not have enough liquidity to purchase new cargoes of feedstock, the official said.
Nghi Son refinery runs solely on crude oil imported from Kuwait.
In December 2021, the refiner imported 1.098 million mt of Kuwaiti crude oil, up 31.8% year on year, while Kuwait crude shipments for the full year 2021 amounted to 8.76 million mt, down 8.8% from 2020, according to latest customs data.
Currently, the plant is maintaining its operation by processing crude oil from its storage facilities, the NSRP official told S&P Global Platts.
If the refiner fails to secure enough cash liquidity or loans to pay for Kuwaiti crude to feed its CDU within the next few weeks, the plant will have to completely shut down its operation by around the middle of February, the official said.
NSRP indicated that the refiner could seek for emergency loans from the government or seek financial assistance from one of its major stakeholders, including Japan’s Idemitsu Kosan, but the stakeholders have been unable to agree on a solution to resolve the situation.
Idemitsu Kosan declined to comment when reached out by Platts.
State-owned PetroVietnam has a 25.1% stake in Nghi Son, with Kuwait Petroleum International (35.1%), Japan’s Idemitsu Kosan (35.1%) and Japan’s Mitsui Chemicals (4.7%).
Nghi Son may have to rely on the government ministries and state-run banking and financial agencies for a rescue package and the refinery is currently waiting for a response from the top decision makers in Hanoi, the official said.
NSRP has been struggling with financial difficulties ever since the outbreak of the COVID-19 pandemic in 2020.
For the most part of 2021, Vietnamese refiners and oil distributors grappled with excess oil stockpiles as domestic fuel consumption tumbled amid a resurgence in COVID-19 cases, prompting the Southeast Asian country slash oil product output and imports throughout last year.
The decline in domestic fuel demand had been so severe that state-run Binh Son Refining and Petrochemical, or BSR, is running out of storage to handle the build up in oil product stockpiles, industry and company sources with direct knowledge of the matter told Platts previously.
The state-run oil company had to briefly suspend middle distillate production at its 130,000 b/d Dung Quat refinery for a few days, Platts reported previously.
During Q2 and Q3, Vietnam’s major oil distributor Petrolimex slashed its monthly term oil products intake from Dung Quat and Nghi Son, the country’s two major refineries.
Many other trading companies and fuel distributors also sharply reduced, or suspended, receiving supplies from the two refiners during the period.
March 31, 9:00 am – April 1, 12:50 pm CET | Hilton Amsterdam The world’s only Middle Distillates conference The exclusive event in the calendar…
Jan 27, 2021
The exclusive event in the calendar for the Middle Distillates community will once again bring together over 150 of Europe’s leading traders, wholesalers, refiners, financial players, end users and other key industry stakeholders, as they discuss the current state of play and forecast for the supply and demand of transport fuels.
As well as offering you the opportunity to meet with delegates face-to-face, we will also host the event online. This means that regardless of your travel circumstances you will be able to stream all the sessions online, chat with other delegates and ask your questions to the speakers via our virtual platform. Even if travel restrictions prohibit you from attending, you can still enjoy the great insights on show.
Your virtual pass will include:
– Access to the virtual platform and all live and on-demand session broadcasts on 27-28 January
– Convenient access and view the event from anywhere through your mobile, tablet and computer
– 1 months post event on-demand access to the virtual platform
– Easy to use networking tools to connect with the audience through the virtual environment
After a crash and recovery roller coaster since 2020, Europe’s beleaguered refiners are facing even more uncertainties in 2022 with fresh challenges due to high…
Dec 16, 2021
After a crash and recovery roller coaster since 2020, Europe’s beleaguered refiners are facing even more uncertainties in 2022 with fresh challenges due to high natural gas prices and by renewed COVID concerns.
Just as the sector’s fortunes appeared to be turning in Q3 2021 amid recovering margins and stronger demand, the discovery of the omicron variant has sent a ripple through oil markets.
Northwest European crack spreads and refining margins softened in early December reflecting market volatility over concerns that new travel restrictions over omicron would curb demand for road fuels and jet.
Even in a case where COVID proves to be more disruptive than expected, S&P Global Platts Analytics expects global oil demand to increase by almost 3 million b/d in 2022 as vaccinations continue to build particularly in countries with high GDP per capita.
“The strength in demand will push refinery runs and utilization rates (even including increased refining capacity) close to their historical ranges, improving margins,” Platts Analytics said in a note.
But with European natural gas and carbon prices lingering close to record highs, regional refiners could face tougher headwinds.
“European refiners are especially exposed compared with other regions, as refiners in certain Asian countries use fuel oil, and US refiners are benefitting from cheaper Henry Hub prices,” according to Platts Analytics.
European refiners normally use some 65 million-80 million cu m/d of gas, Platts Analytics estimates, for power generation and boiling crude. Record regional gas prices have already seen gas-to-oil switching in Europe average 160,000 b/d in October and November, with expectations for it to rise slightly to 170,000 b/d in December.
Platts Analytics expects higher potential for run cuts for Mediterranean refiners that are “unable to hedge exposure to high natural gas prices” while runs in Northwest Europe are expected to improve in Q1 2022 on 2021 but will remain below 2019.
“We expect runs to reach 1Q20 levels starting only in 2Q22,” Platts Analytics said.
Carbon liability exposure for European refiners is also creating pressure on margins. Carbon prices under the EU Emissions Trading System gained 164% since the start of 2021, hitting a fresh record high of Eur90.75/mt CO2e on Dec. 8.
European refiners also remain exposed to new export-oriented capacity coming online elsewhere in the world.
Kuwait’s giant 615,000 b/d Al-Zour refinery started test runs in late 2020 and is expected to be fully online around May 2022. Saudi Arabia’s 400,000 b/d Jazan plant is also ramping up, although its full complete start-up schedule remains uncertain for the moment.
In 2021, Kuwait’s KNPC completed the Clean Fuels project at its Mina al-Ahmadi and Mina Abdullah refineries which will increase their overall capacity and “open new markets.”
Meanwhile, the long-awaited 650,000 b/d Dangote refinery in Nigeria appears to be on track for early 2022 start-up. Once online, it is expected to compete with European refiners for the key US gasoline export market.
At the same time, however, low plant utilization rates and units closures due to the post-COVID demand collapse appear to be in the past for now.
Refinery downtime in Northwest Europe “is expected to fall to more normal levels within the 5-year historical band” in the first quarter of 2022, according to Platts Analytics, after peaking at around 22 million b/d in early 2020.
Those expectations are an improvement on 2021, which brought with it the threat of more refinery closures, such as Norway’s Slagen refinery, announced in April by ExxonMobil and carried out in June.
But other shutdown projects are less imminent, with Shell planning to stop crude processing at the Wesseling part of its German Rhineland refinery in 2025, and Eni likely to stop crude processing at Italy’s Livorno at the end of 2022.
Shell’s announcement adds to the 640,000 b/d of European closures already announced since the start of the pandemic, the International Energy Agency estimates.
Refiners able to circumvent inflated natural gas prices will also benefit from run cuts by other refiners.
However, “a weak margin environment for European refiners may encourage further run cuts, giving cracks some uplift,” Platts Analytics said in its European Market Forecast.
“The market is already tight for most products, and lower regional output will only make it tighter. Still, demand remains the key unknown, and margins for these refiners will mainly prosper with healthy product consumption,” Platts Analytics said.
Overall, European margins should see a modest improvement in 2022, Platts Analytics estimates, albeit remaining at a discount to most US margins. Reference case margins for refining Forties crude with an FCC and visbreaker plant in Northwest Europe are expected to average $3.90/b in 2022, up from $2.49/b in 2021. Refiners using feedstocks priced on a high fuel oil equivalent basis will continue to benefit from a $4-$5/b margin premium compared to refiners purchasing spot natural gas as an input, however.
Diesel cracks, traditionally the biggest marker for refining margins in the region, are expected to average $11.29/b in 2022, up sharply from $6.8/b in 2021, lagging US and Singapore diesel cracks by around $2/b.
The Asian gasoline complex is set to recover further in 2022 as coronavirus vaccination rates and control measures improve, but the pandemic-related concerns continue to…
Jan 06, 2022
The Asian gasoline complex is set to recover further in 2022 as coronavirus vaccination rates and control measures improve, but the pandemic-related concerns continue to steer the market on an uncertain path. Some respite came in the form of increased mobility in the region as more countries move to learning to live with the virus, with the exception of China’s zero-COVID policy.
“Currently, we expect Asian gasoline demand to grow year on year by 410,000 b/d in 2022, after a sharp contraction of 723,000 b/d in 2020 and an increase of 404,000 b/d anticipated for 2021. In other words, Asian gasoline demand is expected to recover to above 2019’s level by 1.2% in 2022.” JY Lim, oil markets adviser at S&P Global Platts Analytics said.
In Southeast Asia, market sources expect Indonesia’s gasoline demand to remain on the upward trajectory through 2022 as the country’s appetite for the motor fuel continued to improve in the fourth quarter of 2021.
The steady momentum was fueled by optimism in the country’s improving mobility index, as well as the acceleration in its national vaccination drive to fully inoculate the population against COVID-19, sources said.
Ramadan in April was also expected to raise gasoline buying activity in the first quarter of 2022, and sources expect a more robust gasoline demand in the coming months.
Driving activity in Indonesia, Southeast Asia’s largest gasoline buyer, surged to 115.7% above baseline levels on Dec. 31, 2021, up from 49.55% above baseline recorded on Dec. 30, Apple mobility data showed.
Driving activity on Dec. 31, 2021 in Indonesia was at its highest since Apple mobility started tracking data on Jan. 13, 2020.
Meanwhile, the gasoline demand outlook in China firmed as the commerce ministry raised gasoline import quotas to 700,000 mt to Chinese trading firms and refiners in 2022.
China’s state-controlled refiners PetroChina, Sinopec, CNOOC and Sinochem received gasoline import quotas of 100,000 mt, 250,000 mt, 100,000 mt and 250,000 mt, respectively.
“A likely reason behind the decision to raise gasoline import volumes would be following the crackdown on independent refineries, giving additional quotas would be sensible to remedy supply crunches in the future,” said a source with knowledge of the matter.
According to Platts Analytics data, gasoline demand in China is estimated to average 3,665 b/d in the first half of 2022, up from the 3,600 b/d average for all of 2021.
Gasoline production is expected to shrink to 3,591 b/d in the first half of 2022, down 8.14% from the 3,909 b/d average in 2021, the data showed.
In the first half of 2022, India’s gasoline demand is expected to average 812 b/d, up from the 761 b/d average in 2021, Platts Analytics data showed in December 2021.
“The impact of omicron on Asia’s mobility is expected to be moderate as any lockdowns are likely to be localized and more targeted,” said JY Lim.
Vaccination rates in Asia were also markedly improved from 2021 levels. Within a short span, countries such as Singapore and Malaysia had 87% and 78.5%, respectively, of the total population fully vaccinated as of Jan. 3, data from the countries’ health ministries showed.
The gasoline complex might face some headwinds as major refiners have announced plans to keep run rates high as crack spreads remain firm.
At the end of 2021, state-controlled refineries in India were heard to be operating at maximum capacity as the transport sector received a boost on fewer movement restrictions amid improved vaccination.
In Australia, the closures of the Kwinana and Altona refineries, respectively, has left the country with only two operating refineries — Viva Energy’s 128,000 b/d Geelong and Ampol’s 109,000 b/d Lytton refineries — which increases its reliance on refined product imports.
Ampol, formally Caltex Australia, will continue refining operations at its Lytton refinery “subject to the government’s refining support package being successfully legislated as proposed.”
Ampol also said it could convert the refinery to an import terminal “should the package not be successfully legislated or, in future, in the case of persistently low refinery margins or other adverse events.”
In its first batch of 2022 oil product exports comprising gasoline, gasoil and jet fuel, China slashed quotas by 56% on the year, leaving only 13 million mt.
“Cargoes might start to come from India more if China export quotas remain tight,” said a Singapore-based trader.
“The supply outlook from China is expected to remain weak, with the Olympics and Chinese New Year holiday coming up, the country would opt to channel barrels inward,” the trader added.