OPEC thinks oil product markets are well supplied in driving season

Jul 15, 2010 02:00 AM

Oil product markets are likely to remain well supplied throughout the summer driving season, the Organization of Petroleum Exporting Countries said.
"Given ample stocks for both distillates and gasoline, barring extensive unplanned supply disruptions, the risk of a product supply shortage during the upcoming peak season is very limited," OPEC said in its monthly oil market report.

"Additionally, by having 1.1 mm bpd of new refinery capacity in 2011, it appears that spare capacity in the downstream sector remains relatively high in the short- to medium-term and the likelihood of product market developments lifting crude pieces in the future is very marginal," the group added.
OPEC expects global refinery utilization to rise in August after the completion of refinery maintenance and expected surge in demand.

In terms of specific regions, OPEC said the picture for US gasoline was mixed, with some positive indications in early June overshadowed by bearish news at the end of the month.
"Increasing domestic output and imports have outpaced gasoline demand growth and led to further gasoline stock builds in the US," OPEC said. The US Gulf gasoline crack spread -- an indicator of refining profitability -- was around $ 12 a barrel in June.

In Europe, product market sentiment was pressured by limited export opportunities for gasoline and fuel oil.
"Supply restraints by European refiners provided support for the distillate market and diesel's discount to gasoline narrowed," the group said. "With increasing refinery throughputs and rising exports, especially from the US and Russia, the European distillates market could lose some ground."

The gasoil crack versus Brent crude in Rotterdam was more than $ 12 a barrel in June. In Asia , market sentiment also deteriorated.
"By completion of refinery maintenance and returning refineries to normal operation, it is expected that Asian gasoline outputs to outpace regional demand and to exert pressure on gasoline prices," OPEC said.
The gasoline crack spread versus Dubai crude oil in Singapore rose to around $ 8 a barrel in the last week of June.

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