Industry Trend Analysis - Refiners' Demand For Crude Set To Topple - MAR 2018


BMI View : Seasonally high refining run rates in Europe are set to fall substantially, as maintenance works ratchet up and refining margins begin to fade. This will act as a substantial drag on global crude demand in Q1 and feeds into our bearish short-term outlook on Brent.

Early disclosures of planned maintenance works by European refiners points to a heavier turnaround this spring. We expect maintenance outages to rise above their seasonal norms, driven by several factors, including trends in oil prices and product crack spreads, the current low level of outages and a backlog of deferred maintenance works.

Currently, European refining outages are seasonally low. Comparing outage levels in 2018 with outages over the same period last year shows that in North West Europe outages have averaged 223,000b/d lower in the year to date. These have been only partly offset by a higher level of outages y-o-y in the Mediterranean (+17,000b/d) and Eastern Europe (+65,000b/d). For all three sub-regions, outage levels are significantly below their three-year seasonal averages.

Outages To Rise Seasonally
European Refinery Outages*, 2018 & 3YR Range, '000b/d
* atmospheric distillation unit outages in North West Europe, Eastern Europe & the Mediterranean; 3YR range = 2015-2017. Source: Bloomberg, BMI

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