European Refiners to Cut Runs in Weeks, Facts Global Energy Says

European refiners may be forced to reduce processing rates this summer as rising crude prices erode profits, according to Singapore-based researcher Facts Global Energy Inc.

“I think the weaker refiners will need to cut back within the next few weeks,” Roy Jordan, a Facts analyst in London, said by telephone today. “With the Brent crude price so strong, it’s very difficult to make money on gasoline.”
Profits from refining are being eroded by reduced demand in Europe and the U.S., combined with ample fuel supplies, he said.
Northwest European refiners that make high-quality products such as gasoline lost an average $1.30 a barrel last week, after breaking even in the previous week, according to Facts.
The motor fuel’s premium to Brent crude fell to a three- month low yesterday at $4.49 a barrel, according to data from London-based broker PVM Oil Associates Ltd. Naphtha’s discount to Brent dropped to $10.62 a barrel yesterday, the lowest since Jan. 8, 2009, the PVM data showed.
North Sea Brent futures have advanced 25 percent this year. The July contract was $1.67, down 1.4 percent, at $118.49 a barrel as of 1:25 p.m. on London’s ICE Futures Europe exchange.
Source: Bloomberg