Asia Rethinks Run Cuts as Margins Improve

Copyright © 2023 Energy Intelligence Group All rights reserved. Unauthorized access or electronic forwarding, even for internal use, is prohibited.

In a sign of how quickly market conditions are changing in Asia, some regional refiners have decided to forego earlier planned run cuts due to improving margins. That could hurt the chances for a tightening of the Pacific Basin products market, a crucial hub for global demand. As recently as early May, refineries in South Korea, Japan, Singapore, Taiwan and Thailand were planning or considering run cuts ranging from below 5% to 10%. However, Energy Intelligence understands that a Taiwanese refiner that was planning to trim runs by 300,000 barrels per day only two weeks ago has since decided against the cuts. Trading sources say some other planned run cuts appear unlikely to materialize also. For some refiners, margins — aided by lower crude oil prices — have improved enough recently that cuts are no longer necessary. And with the peak US summer driving season underway — with its associated jump in gasoline demand — Asian gasoline cracks have begun to increase significantly, bolstering overall refining margins. Cracks measure the profitability of refining products from crude.

Refining, Oil Products, Oil Supply
Wanda Ad #2 (article footer)
Mounting risks threaten a predicted loosening of LNG markets by 2026, as the industry copes with cost inflation, labor shortages, construction delays and other challenges.
Thu, Sep 28, 2023
Bulgaria's parliament has voted to phase out imports of Russian crude oil by October of next year.
Fri, Sep 29, 2023
Saudi Aramco has signed an agreement that could lead to another investment in an oil refining and petrochemicals complex in China.
Fri, Sep 29, 2023