Europe's crisis–struck refinery industry enjoys an unpredicted 'second spring' as plant closures in the US led to a shortage in refinery products. Global Data’s expert analyst Jeffrey Kerr believes that European gasoline production is playing a vital role for supplying America...
London/United Kingdom – Economically-hard hit Europe has seen more than its fair share of refinery closures over the last two years, Kerr states. A combination of high crude oil prices and relatively low refined product prices, as well as dismal gasoline and middle distillate demand growth prospects, have resulted in a number of high-profile refinery closures and company bankruptcies – the most prominent being the insolvency of the continent's biggest independent refiner Petroplus in January.
A similar development could be witnessed in the US, where especially the East Coast refining has been affected by the shutdowns of large refineries in the Philadelphia area shut down, threatened to be shut down, or sold to new owners, keeping the supply of motor fuels tight amid the traditional summer driving season, when gasoline demand usually rises.
European Refiners Have Direct Impact on Overseas Market
“While it’s not new for Europe to send its excess gasoline to the US in the summertime, the magnitude of those shipments this year is much higher. The shut refineries in the Philadelphia area and the Caribbean have really changed the dynamic of the East Coast marketplace, causing wide swings in cash market prices,” Jeffrey Kerr, Global Data’s Senior Analyst of Downstream Oil & Gas in New York stated.
Since the East Coast gasoline cash market sets the price for the rest of the US through the futures market, Kerr added, European refiners, now more so than ever before, are having a direct impact on US gasoline markets, coast-to-coast.
While Europe's refinery market groans under the burden of tight margins and overcapacities, the oil and gas industry in Asia still sees room for further growth: China alone could account for refinery capacities of nearly 600 million metric tons per annum (MMtpa) until 2016, dominating the Asia–Pacific region's oil market, figures by Global Data show. More in Refinery Markets Boom in Asia–Pacific!