The global refinery intake has witnessed a gradual rising trend so far in 2024 and reached a year-to-date (y-t-d) high of 82 mb/d in August, albeit this was 600 tb/d lower, y-o-y. In September, however, this trend reversed, with the global refinery intake declining by 1.4 mb/d, m-o-m, (Graph 1) due to the start of the refinery maintenance in the Northern Hemisphere and an active hurricane season. Compared with a year earlier, the September global refinery intake was down by 1.0 mb/d. This decline aligns with historical trends and is expected to continue into October, with 1.7 mb/d of capacity scheduled for temporary shutdowns for heavy repair works. The higher refinery spare capacity and y-o-y output growth from recent capacity additions may soften the impact of the upcoming refinery maintenance season.
In addition to the planned maintenance, the ongoing hurricane season in the US may present further risks regarding product availability. The extent will depend on the locations where hurricanes make landfall and the severity of their impact on refinery operations. In Europe, total product inventories have remained well-supplied, reflecting an 11 mb, y-o-y, increase as of 26 September. Gasoil represented 85% of this monthly rise, as Europe has been stockpiling gasoil in anticipation of the winter season, resulting in a surge of gasoil imports into the region. Going forward, however, product stocks are anticipated to face downward pressure due to the expected heavy maintenance season. Anticipated colder weather in the coming months in Europe could create upside potential for heating fuel markets, thereby exerting additional pressure on diesel stock levels in the near term.
In Asia, refinery runs are expected to remain healthy, supported by robust near-term regional requirements and the recent release of product export quotas in China. Although offline capacities in the region are projected to increase by 230 tb/d, m-o-m, reaching 1.7 mb/d in October, this can easily be compensated for, given the large scale of the Asian refining system. Despite the region’s weak refining margin environment, reduced product output in the Northern Hemisphere is anticipated to support refinery runs in Asia during October before experiencing a decline in the following months.
In anticipation of the upcoming winter, a typical seasonal increase in heating oil demand is expected, driven by rising requirements in the Northern Hemisphere. Overall, OECD Europe, OECD Americas, and OECD Asia Pacific are projected to experience demand growth for fuel oil and diesel in 4Q24 (Graph 2). Accordingly, the OECD’s total heating fuel demand in 4Q24 is forecast to increase by 80 tb/d, y-o-y. In OECD Europe and the US, heating oil is forecast to drive demand, while in OECD Asia Pacific, ‘other fuels,’ primarily LPG, are forecast to support 4Q24 demand. Among these regions, OECD Americas is expected to see the largest y-o-y demand increase of 65 tb/d, followed by OECD Europe with approximately 10 tb/d, while oil demand in OECD Asia Pacific remains broadly unchanged. In 1Q25, heating fuel demand in the OECD region is projected to grow by 117 tb/d, y-o-y, primarily driven by increases in the Americas and Europe, with a marginal rise expected in the Asia Pacific. Looking ahead, the World Meteorological Organization forecasts about a 60% chance of the La Niña weather phenomenon impacting the Northern Hemisphere from 4Q24 to 1Q25. This could lead to a relatively colder winter, thereby increasing the upside potential for heating fuel demand.
Source: OPEC