A major variable underpinning our bearish outlook is our belief that global throughput volumes will remain robust.
Refinery margins have held up, despite lower-than- expected oil products demand.
This is primarily owing to periods of unexpected refinery outages, such as the current refinery closures in the US due to strikes.
Standard Chartered notes...
- We believe global crude throughput volumes continue to grind upwards.
- We estimate that they rose by almost 5% in Q4-2014 to just below 78mb/d.
- This equates to a 2.67mb/d increase in operational refinery capacity.
- China alone accounted for 20% of this, increasing its operational refinery capacity by 0.52mb/d via refinery expansion.
- India boosted its operational refinery capacity by 0.12mb/d by ramping up run rates on the back of declining crude oil prices.
- US run rates rose 0.34mb/d y/y, while Russia's increased by 0.25mb/d.
- The Middle East's operational refinery capacity expanded by 0.17mb/d as Saudi Aramco and Total's joint venture 0.4mb/d refinery SATORP came online.
- We expect refinery throughput volumes to remain robust in 2015 and 2016.
- China should again lead total refining capacity expansion, with approximately 0.6mb/d of additional operational capacity, plus another potential c.0.3mb/d.
- This is despite China's revised downstream investment plans, which now focus on expanding its oil and gas exploration and production ventures.
