Europe’s refining capacity that will be offline during the autumn refinery maintenance season is expected to be 40% lower compared to last year, according to energy consultancy Wood Mackenzie.
As the global refining industry enters the autumn period of maintenance after the peak summer driving season, Europe’s capacity available for refining crude into fuels will be higher than in 2022 and the last pre-pandemic year 2019, WoodMac’s analysts have told Reuters.
In the fourth quarter of 2023, Europe’s refinery capacity that will be offline is expected at around 800,000 barrels per day (bpd), around 40% lower compared to the fourth quarter of 2022 and 2019, Wood Mackenzie says.
“In early 2023 we observed a much higher maintenance period through March and therefore would expect the autumn maintenance outlook to be lower – aligning with the typical maintenance trend that higher maintenance in spring typically indicates lower autumn maintenance,” Emma Howsham, an analyst at WoodMac, told Reuters.
With a less busy maintenance period ahead, Europe’s refiners will produce more fuels for the domestic market, but they are likely to face steeper costs for crude that could limit their refining margins.
Brent crude prices moved past the $90 per barrel mark last week after Saudi Arabia extended its 1 million bpd oil production cut until the end of the year.
The market is expected to further tighten, analysts say.
Still, it could be the refining maintenance season that could ease market tightness later this year, according to Russell Hardy, the chief executive of the world’s biggest independent oil trading house, Vitol.
The tight oil market could see some reprieve in the coming two months as refineries plan end-of-summer maintenance, Hardy said at the Asia Pacific Petroleum Conference (APPEC) by S&P Global Commodity Insights last week, as carried by Reuters.
Although supply would improve globally, the sour crude market will remain tight as the production cuts from the Middle Eastern OPEC+ members continue, Hardy noted.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com