How did 2015 crude oversupply affect fuel demand and refined products demand? What were the consequences for refiners? What are the 2016 forecasts? How will the 2015 Paris Agreement influence this context?
Axens Marketing & Communications Vice President Eric Benazzi looks back at 2015 oil and gas market highlights and gives his insight on 2016 forecasts regarding downstream sector.
2015 was highlighted by a crude oversupply of 1.3 Million barrels per day, which played a part in keeping oil prices at a low level, fluctuating between $40 and $60 dollars per barrel.
Such prices stimulated refined products’ demand, thus allowing for a 1.9% leap to reach 94.5 Million barrels per day in 2015 as opposed to a 0.8% rise the previous year.
The consequences have been positive for refiners, especially European, who saw their margins recover to reach a level unheard of in years. The counter effect of an affordable barrel is that petroleum companies saw their revenues decrease as crude prices fell.
Therefore, integrated companies committed to investment reduction programs that impacted upstream – mainly – as well as downstream sector.
In the Petrochemical industry, naphtha price decrease allowed European steam crackers to improve their competitiveness towards the US that use affordable ethane, produced by the exploitation of shale gas.
This year, crude oversupply should remain at least until Third quarter, maintaining prices at a low rate for a good part of the year.
Demand in refined products should still be stimulated and progress by 1.2 percent to reach 95.7 Million barrels per day driven by motor fuel demand.
Demand in olefins should continue to grow by 3-4 percent per year in 2016 and the growth for aromatics could reach 5-6 percent per year. That will continue to drive capacity expansion, even if crude oil prices stay low.
These estimations will highly depend on GDP growth. The common consent is that global growth should be about 3.6 percent in 2016. However, these estimations rely greatly on the Chinese economic performance, which is estimated to reach 6.3 percent this year. A more consequent slowdown of the Chinese economy would lead to lower projections.
As a result, and once again, crude prices are expected to remain at a low level in the coming year.
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