FGE - Weekly Oil Market and Refining Update - 04 July

Weekly Oil Market & Refining Update
India’s surprise export tax caps the downside to diesel

cracks
Short-Term Global Oil Service 4 July 2022
Highlights
•  Crude: Prices increase on tight supply but the upside is capped by recession fears
•  Refining Developments: Strike action causes ExxonMobil to declare force majeure at its Fos refinery in France
•  Refining Margins: Margins take a hit on easing diesel and gasoline cracks, but refiners are still incentivised to run
flat out
•  Naphtha: West/East spread recovers on stronger pull from east and higher Russian supply
•  Gasoline: Blenders waiting to push more naphtha into the gasoline pool
•  Middle Distillates: India’s surprise export tax caps the downside to diesel cracks
•  Fuel Oil: Asian VLSFO cracks hit record high, but set to ease on rising production
•  Benchmark Refinery Margins
Crude: Prices increase on tight supply but the upside is capped by

recession fears
Platts Dated Brent increased by $3.2/bbl to a weekly average of $122/bbl last week, driven by bullish supply fundamentals.
However, lingering recession fears prevented prices from rising any higher.
Platts Dated Brent increased to an almost two-week high of $124.6/bbl on Wednesday (29 June) before easing to $121.5/bbl
on Friday (1 July).
The tug-of-war between recession fears and tight supply continues today, resulting in day-to-day price volatility, with ICE Brent
front month currently trading $1.5/bbl higher than at the opening, having traded $1.2/bbl lower than at opening earlier today.
 Benchmark Crude Prices, Weekly Averages,  Benchmark Crude Diffs, Weekly Averages,
$/bbl $/bbl
www.fgenergy.com Page 1 of 17
FGE - Weekly Oil Market & Refining Update 4 July 2022
Supply outages in Libya and Ecuador supported prices last week; another potential strike offshore Norway
from tonight
In Libya, protests related to the ongoing East/West political stand-off have led to a series of field outages and port blockades
since mid-April. While Libyan output had recovered slightly from the lows seen earlier in June, the political situation remains
very fragile. Libya's National Oil Corporation (NOC) declared force majeure at the Es Sider and Ras Lanuf ports as well as El
Feel oilfield on Thursday (30 June), which could result in production declining sharply to circa 400 kb/d, 800 kb/d lower than in
1Q 2022.
Widespread political unrest in Ecuador resulted in crude production there halving to about 240 kb/d last Wednesday (29 June).
Anti-government protests ended last Thursday (30 June), after the government as part of the deal to end protests agreed to
reduce pump prices by $0.15/bbl (Ecuador uses the US dollar as its national currency). Ecuador’s oil output rose slightly to
about 260 kb/d on Thursday (30 June). However, a force majeure on Oriente crude exports, Ecuador’s flagship grade, will not
be lifted until 7 July as Petroecuador, the state oil company, is still in the process of assessing how long it will take to fully bring
production back.
An oilworkers’ strike in Norway is threatening to shut in 130 kb/d of oil output offshore Norway. Lederne, a Norwegian workers’
union, said that oil workers at Equinor’s Gudrun, Oseberg South and Oseberg East platforms will stage a walkout at midnight
today, after negotiations over a wage deal broke down. The strike will be extended to Equinor’s Heidrun, Aasta Hansteen and
Kristin platforms at midnight tomorrow. A seventh field, Tyrihans, will also have to shut because its output is processed at the
Kristin platform.
These supply outages are further contributing to what is already a very tight crude market, a point further underlined in this
week’s US stocks data. US commercial crude stocks fell by 2.8 mmb in the week ending 24 June, despite another 7.0 mmb
SPR drawdown during the week under the US government’s plan to release some 30 mmb each month from the SPR through
October.
From a pricing perspective, physical crude markets in Europe looked even tighter last week than the previous week.
Backwardation in Brent CFDs is back to double-digit levels and West African crude spreads to Brent climbed to new highs.
 Brent CFD Curves on Selected Dates (Daily),  Selected West African Spreads vs Brent
$/bbl (Daily), $/bbl
While the physical crude market is currently extremely tight, this situation may not persist. Oil markets are facing huge
uncertainties moving into 4Q 2022 and 2023, both on the demand and the supply side.
Downside risks to demand projections for 4Q 2022 and 2023 stem from rising inflation, which has pushed central banks to hike
interest rates, fuelling fears of a global recession.
There is also a high degree of uncertainty with regard to future supply projections, mainly due to western sanctions on exports
of Russian oil, OPEC+’s limited spare output capacity, developments (or lack of) in the restarted USA-Iran nuclear talks, and
the ongoing political unrest in Libya (see Weekly Fundamentals – 30 June 2022).
Outlook: Platts Dated Brent has averaged around $124/bbl in June, a few dollars shy of our estimate of $127/bbl made earlier
this month. Our balances point to global crude stockdraws in July and August; given how tight the market is currently, we
expect prices to creep up from current levels in the next 4-6 weeks. We continue therefore to see upside to Platts Dated Brent
in July, especially from current levels, with this benchmark expected to rise above $130/bbl (see Crude Alert - Market Update
- Price slump provides entry point for the bulls – 28 June 2022).
Refining Developments: Strike action causes ExxonMobil to declare force

majeure at its Fos refinery in France
East of Suez
•  China's state-owned Sinopec said it has produced its first trial volumes of sustainable aviation fuel (SAF), mainly using
used cooking oil as feedstock, at its 100,000 tonne/year Sinopec Zhenhai Refining & Chemical Co biojet facility near
Ningpo in eastern China.
•  A joint venture between Indonesian state Pertamina and Russia's Rosneft to build a 230 kb/d refinery in Tuban, East
Java, remains “on track”, according to a senior government official who supervises the project. "The Russian party
has been negotiating to get tax holidays. “The project is still on track”, the unnamed official was quoted as saying by
The Straits Times on Friday (July 1).
West of Suez
•  Force majeure remains in place on some products at ExxonMobil’s 140 kb/d oil refinery in Fos-sur-Mer, southern
France. ExxonMobil is restarting the refinery after some units had to be shut down because of strike action which
started on 1 July and ended on 2 July.
•  Germany’s Bayernoil is scheduled to restart deliveries of some fuels from its Vohburg and Neustadt refineries
tomorrow (5 July). On 30 June Bayernoil halted heating oil and gasoil/diesel deliveries from the 200 kb/d complex
north of Munich after the hydrocracker at Neustadt was hit by lightning on 27 June.
•  Production has been halted at Venezuela’s 645 kb/d Amuay refinery following a power outage on Saturday. The
refinery, which is owned and operated by Venezuelan state PDVSA, has been operating at well under capacity for
many years. Separately, PDVSA suspended gasoline production at the 310 kb/d capacity Cardon refinery in late June
after problems at a naphtha reformer there. Unplanned maintenance at the reformer will take 18-21 days, according
to reports. Amuay and Cardon together form the ageing Paraguana refinery complex.
•  Mexican President Andres Manual Lopez Obrador officially inaugurated Pemex’s Olmeca refinery on 1 July, despite
the fact that the project is still well short of completion. The under-construction 340kb/d refinery at the Dos Bocas
terminal in the southeastern state of Tabasco is not expected to start full production until early 2024 at the earliest.
Refining Margins: Margins take a hit on easing diesel and gasoline cracks,
but refiners are still incentivised to run flat out
Refinery margins weakened last week from their recent record highs as some pressure came from easing middle distillate and
gasoline cracks. In fact cracks were down w-o-w in every region and across every product except VLSFO (and Singapore
naphtha). But with FCC and hydrocracking margins in Europe and Asia still averaging above $20/bbl, and coking margins even
higher, the decline in margins will do little to dissuade refiners from running flat out in the weeks ahead.
Moreover, product cracks rebounded quite significantly last Friday after India slapped a windfall tax on its gasoline and diesel
exports of $12/bbl and $26/bbl respectively (see Middle Distillate section), suggesting the slide in cracks is already meeting
some resistance. That said, the rapid fall in key product cracks seen over most of last week should serve as a timely reminder
of the volatility in the market. Indeed, diesel and jet cracks in Europe temporarily shed more than $20/bbl from their high seen
in the week before. The most widely-cited reasons for the fallback were growing fears of a recession, while onshore middle
distillate product stocks in main areas also built by a sizeable 4 million barrels.
The fact that the ephemeral “fears of a recession” were behind the fall highlights just how sentiment-driven the product market
currently is. Indeed, we have pointed this out before but it is worth noting again: the product cracks appear to be pricing in a
loss of Russian products, but Russian clean product exports are by-and-large still flowing at normal levels. Moreover, Europe
remains the key buyer of Russian gasoil/diesel, taking at least 700 kb/d of June-loading barrels.
 Seaborne Loadings of Russian Oil in June* vs 2021 avg, kb/d, %
Looking ahead, we are at a crossroads. With Russian products still flowing into Europe and refiners incentivised to run flat out,
all eyes should be fixed on inventories. So far the onshore product builds in the five key areas that provide weekly statistics
have been mediocre, though middle distillate stockbuilds appear to be picking up pace. A combination of normal Russian
exports, big stockbuilds, and growing recessionary fears would push cracks lower over the summer. That said, and as we
highlighted last week, if the stockbuilds remain well-below seasonal norms and we head into winter without a comfortable
supply cushion, it would be a strong indication of a lack of spare refining capacity; something that would propel cracks higher
throughout 1H 2023 and likely beyond. Product inventories therefore need to be monitored very closely and understood in the
coming weeks.
 Global Refinery Margins (week avg), $/bbl  NWE Product Cracks, Ratio to Brent
 Benchmark Refinery Margins**
Weekly Averages (w/e) w-o-w Monthly Averages (f'cast)

$/bbl 24-Jun-22 01-Jul-22 Change Jul-22 Aug-22 Sep-22
Northwest Europe
Brent Hydroskimming 22.67 15.61 -7.06 15.45 11.84 11.98
Brent FCC 29.90 22.41 -7.49 20.80 16.82 15.94
Mediterranean
Urals Hydroskimming 42.48 34.92 -7.56 36.76 34.87 37.08
Urals FCC 54.21 46.68 -7.53 46.11 43.08 43.64
US Gulf Coast
LLS FCC 48.30 42.22 -6.08 36.19 31.43 29.36
Mars Coking 47.40 40.81 -6.59 32.17 29.37 26.73
Singapore
Dubai Hydroskimming 15.54 8.76 -6.78 6.29 7.12 6.52
Dubai FCC 23.42 16.53 -6.88 11.93 11.57 10.45
Dubai HDC 29.94 21.81 -8.13 15.80 15.08 14.15
Dubai RFCC 32.00 24.14 -7.86 16.24 15.13 13.53
 US RINs Costs & Impact on Refinery Margins**
Weekly Averages (w/e) w-o-w Historical Monthly Average

$/bbl 24-Jun-22 01-Jul-22 Change Jun-22 May-22 Apr-22
US RINs
Gasoline 5.32 5.57 0.24 5.73 6.27 5.68
Diesel 9.55 8.34 -1.21 9.11 9.58 13.69
+
Refinery Margin Impact 5.37 5.12 -0.25 5.42 5.82 6.77
+ based on average US refinery yield
Source: FGE
 Global Refinery Runs Outlook
mmb/d Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22
Africa 1.7 1.8 1.7 1.6 1.6 1.7 1.6 1.7 1.6
Asia Pacific 30.0 30.1 29.8 28.5 28.6 28.8 29.6 30.2 30.2
China 14.1 14.0 13.8 12.6 12.8 13.1 13.3 13.7 14.0
Rest of Asia 16.0 16.2 16.0 15.8 15.9 15.8 16.3 16.5 16.1
Europe 11.4 11.5 11.1 11.7 11.7 11.7 12.0 12.2 11.9
FSU 7.0 6.9 6.4 5.9 5.8 6.0 6.1 6.0 5.6
Latin America 4.4 4.5 4.5 4.6 4.5 4.5 4.5 4.6 4.5
Middle East 8.7 8.5 8.6 8.8 8.9 8.9 9.2 9.4 9.2
North America 17.2 17.1 17.6 17.2 17.6 18.2 18.2 18.3 17.8
Total 80.4 80.5 79.7 78.2 78.7 79.7 81.3 82.4 80.9
mmb/d y-o-y Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22
Africa -0.1 0.1 0.1 0.0 -0.1 -0.0 0.1 0.0 -0.0
Asia Pacific 0.1 1.0 0.7 -0.7 -0.0 -0.5 1.0 1.6 1.9
China -0.2 -0.2 -0.3 -1.5 -1.5 -1.8 -0.6 -0.1 0.4
Rest of Asia 0.3 1.2 1.0 0.8 1.5 1.3 1.6 1.7 1.6
Europe 1.0 1.1 0.6 0.7 0.8 0.7 0.6 0.4 0.3
FSU 0.7 0.2 -0.4 -0.9 -0.7 -0.7 -0.7 -1.0 -1.1
Latin America 0.2 0.2 0.2 0.8 0.4 0.3 0.3 0.4 0.1
Middle East 0.5 0.5 0.6 0.7 0.7 0.7 0.9 1.2 0.8
North America 1.1 3.1 1.5 0.6 0.6 0.2 0.6 0.8 0.9
Total 3.5 6.1 3.3 1.2 1.6 0.7 2.8 3.3 2.9
Source: FGE
Naphtha: West/East spread recovers on stronger pull from east and higher
Russian supply
Global naphtha cracks weakened again in Europe and the US but did manage to post a gain in the key Asian market. This is
a good sign for naphtha, as a healthier Asian market would help clear the global naphtha glut. There are also other signs that
naphtha appears to have found a floor and is setting itself up for a rebound from current extreme lows.
Indeed, naphtha time structures have flipped into backwardation, with the M1 premium over M2 last seen at around $1/bbl in
both Singapore and NWE. Moreover, arbitrage dynamics have also improved markedly with the CFR MOPJ assessment
jumping back to a healthy premium against the CIF NWE forward curve (see Fig. 11). In fact, current premiums are wider than
seen anytime since 2020, suggesting that flows should start picking up soon.
The wider inter-regional spread is likely the result of both stronger demand in Asia and higher supply in Europe. Demand for
naphtha as a petchem feedstock has increased relative to LPG due to a stronger market for aromatics, driven in part by strong
blending incentives from the gasoline pool (e.g. from toluene). Moreover, several crackers in East Asia are coming out of
maintenance, while there are some signals in China hinting at a rebound in demand. For instance, Chinese domestic air travel
has rebounded to almost 90% of average 2019 levels, up from less than 20% in early April immediately after the Omicron-
related lockdowns (see Fig. 12). We take the increased domestic flight activity in China as a sign of an improving overall
Chinese demand picture, something that portends well for manufacturing activity and petchem demand—as well as arbitrage
inflows from the West.
Meanwhile naphtha availability has increased in the Atlantic Basin, following sharply higher Russian loadings. Vortexa data
show that June-loading naphtha barrels from Russian ports increased to around 520 kb/d, up around 200 kb/d relative to
loadings in April and May. We note also that Russia’s Black Sea Tuapse refinery appears to be up-and-running again too, with
June seeing the first exports of naphtha since March.
 Naphtha CFR MOPJ vs CIF NWE, $/t  Chinese Flights, Index (1= Avg 2019 Flights)
 Global Regional Naphtha Cracks**

Naphtha
NWE/Brent -30.0 -32.3 -2.3 -20.87 -18.46 -15.28
MED/Urals -3.5 -5.4 -1.8 11.48 14.04 17.47
USGC/LLS -23.6 -23.7 -0.1 -27.79 -16.60 -17.60
SING/Dubai -26.7 -25.6 1.1 -13.00 -11.00 -10.00
Source: Platts*, FGE
Gasoline: Blenders waiting to push more naphtha into the gasoline pool
Average weekly gasoline cracks were down across the board as they followed the middle distillate complex lower. As in the
case for middle distillates, the weekly decline was softened by a rebound on Friday. The rebound largely happened post-
Singapore-close, meaning that the w-o-w loss in Singapore looks heftier on paper at -$6/bbl vs declines of between $1.60/bbl
and $2.30/bbl in Europe and the US.
US gasoline inventories rose by 2.6 mmb last week but remain almost 12 million barrels below the 2015-2019 average. That
said, stocks look right in line with average 2015-2019 forward demand cover, after having built around one day’s worth of
forward cover over the past two weeks (EIA data).
US gasoline exports meanwhile remained extremely high at 970 kb/d, exceeding total gasoline imports by around 150 kb/d.
US gasoline exports are almost 500 kb/d higher than the five-year average (2015-19). While much of this can be explained by
a lack of intra-US pipeline capacity as well as the Jones Act, which makes it expensive to ship gasoline between US ports, the
figure still looks high. One factor which may be playing a role is the US spec change to 10 ppm gasoline that came into force
back in 2017. It is possible that the full impact is only being felt now due to initial amounts of credits, which delayed the effective
implementation date into 2020. But demand in 2020 and 2021 was severely impacted by demand loss on account of the
COVID-19 virus, meaning that we may only now be seeing the full effects of the spec change as demand recovers to pre-
COVID levels.
That said, the recovery in demand is likely to hit some speed-bumps in the form of high retail prices which, for the USA, were
last seen at around $4.80/gal (AAA). While this is around 4% lower than the record high recorded in mid-June, it is still a very
high level that is expected to limit the summer uptick in demand. Indeed, for North America, we now expect demand in 3Q
2022 to remain largely stable to 2Q 2022, at around 9.9 million b/d (+30 kb/d, q-o-q).
Looking ahead, further downwards pressure for gasoline cracks will come with the shift from summer to winter grade which will
unlock more naphtha barrels for blending into the gasoline pool, because more higher-octane butane will be permitted as a
blendstock. With reforming margins still at $50-75/bbl depending on region, blenders will be waiting in the wings to push as
much naphtha into the gasoline pool as possible, once the octane constraint is eased by increased butane blending. The
combination of a surge in supply and upside-constrained demand (due to high retail prices) leads us to expect a larger decline
in gasoline cracks than what the forward curve is currently pricing in.
 NYMEX NYH RBOB/WTI Crack, $/bbl  Global Reforming Margins, $bbl
 Global Regional Gasoline Cracks**

Gasoline
NWE/Brent 41.4 39.5 -1.9 30.35 28.60 20.54
MED/Urals 76.6 72.0 -4.6 61.92 58.36 52.83
NYH (RBOB)/WTI 53.1 50.9 -2.3 52.80 46.96 35.24
USGC/LLS 53.7 52.1 -1.6 42.96 39.52 31.40
SING/Dubai 39.7 33.7 -5.9 25.90 22.50 19.10
Source: Platts*, FGE, NYMEX
Middle Distillates: India’s surprise export tax caps the downside to diesel
cracks
Average weekly middle distillate cracks fell sharply last week and were only rescued from even deeper losses by a surprise
announcement of a $26/bbl tax on Indian diesel exports (more on this below). Despite the rebound on Friday, the average w-
o-w declines for gasoil, jet/kero, and diesel were in double-digit $/bbl territory, with the jet/kero crack in Europe taking the
biggest hit at close to -$19/bbl.
The big declines were dramatic but did not come as too much of a surprise. With cracks as high as they are at present there
is plenty of fat on the bone. In other words, the impact of last week’s massive decline in cracks on global middle distillate
balances will be minimal as refiners are still being incentivised to run flat out and produce as much diesel as possible.
We have been expecting middle distillate stockbuilds for some time now and they appear to be beginning to pick up pace.
Onshore weekly middle distillate inventories in main areas posted a solid increase of over 4 million barrels w-o-w bringing the
gains since the low point in mid-April to around 17.5 million barrels. With refiners running flat out and Russian diesel still flowing
at average 2021 levels, the prospect of a slowdown in demand could see further strong stockbuilds, but there is still a long way
to go of at least another 25 million barrels, before stocks reach “normal” levels. Moreover, it would be prudent for refiners to
exceed normal levels and build up a cushion ahead of the European embargo on Russian product imports, which could lead
to sizable declines in Russian runs and hence tighter global middle distillate balances.
On top of these concerns came India’s surprise move on 1 July to slap a $26/bbl (at current interest rates) windfall tax on Indian
diesel exports, effective immediately and likely to last until the end of March 2023. There is also a requirement for most Indian
refiners (those in SEZ’s appear to be exempt) to supply 30% of their produced diesel to the domestic market.
 Global Diesel Cracks vs Dated Brent, $/bbl  US and East of Suez Diesel Arb to NWE, $/bbl
Given the nature of the windfall tax at a flat $26/bbl, as opposed to a percentage, we note a potential concern that arbitrage
economics for Indian diesel exports may fail on account of the level of the tax. This could occur if diesel cracks continue to
correct downwards – something that could happen over the summer if we see continued stockbuilds amid continued Russian
exports, something that could trigger a potential sell-off particularly with recession fears making the rounds.
In terms of Indian refining economics there is also a significant difference (probably in excess of $15/bbl) whether the diesel is
produced using cost-advantaged Russian Urals or non-discounted crude e.g. from the Middle East or Africa. In the event of a
collapse in diesel cracks as outlined above, a dependency on discounted Russian crude might arise, in order for India to be
able to supply diesel to the international market in large quantities.
That said, temporarily taking some Indian exports out of the picture also sets a floor beneath how far diesel cracks can fall
before tightening up the market to levels that stabilise cracks. The duration of the windfall tax also extends over the critical 1Q
2023 period when the EU’s ban on Russian diesel imports comes into force, adding a further layer of uncertainty.
 Global Regional Middle Distillate Cracks*

Jet/Kero
NWE/Brent 61.1 42.1 -18.9 45.48 35.15 37.84
MED/Urals 95.8 76.9 -18.9 79.45 68.86 71.60
USGC/LLS 68.5 54.6 -14.0 51.45 41.32 42.60
SING/Dubai 58.7 44.8 -13.9 30.20 28.40 27.70
Diesel/ULSD
NWE/Brent 69.4 53.7 -15.7 45.71 35.33 39.03
MED/Urals 102.7 86.6 -16.0 79.58 68.95 72.70
USGC/LLS 74.9 61.0 -13.9 55.45 45.32 46.35
SING/Dubai 73.1 59.7 -13.4 36.50 33.70 30.90
Gasoil
NWE/Brent 63.5 49.1 -14.4 42.94 32.65 35.64
MED/Urals 100.0 84.9 -15.0 76.18 66.23 69.51
USGC/LLS 63.7 48.4 -15.3 44.70 34.74 35.09
SING/Dubai 64.0 50.2 -13.8 32.36 29.62 26.59
Fuel Oil: Asian VLSFO cracks hit record high, but set to ease on rising
production
HSFO cracks remained in negative territory last week, weighed down by higher crude prices and an uptick in supply given
positive hydroskimming margins seen in May and June for sour crude. Meanwhile, VLSFO cracks maintained elevated levels,
even striking a record high in Singapore, due to tight availability of the low-sulphur grade. We hear the earliest delivery date
for VLSFO bunkers in Singapore is 10-12 days, compared to the usual 5-7 days.
We expect an increase in VLSFO production as refineries return from maintenance and raise runs in response to strong cracks.
In Asia, supplies are expected to increase by close to 100 kb/d from July to December, due in part to higher Chinese output.
That said, risks are skewed to the upside in the event of any unplanned refinery outages. In addition, India’s latest export tax
on gasoline, jet fuel and gasoil could further tighten the distillate market, which would then push up VLSFO cracks.
 Asia VLSFO Supply, kb/d  Russia HSFO Exports, kb/d
Source: Vortexa, Refinitiv, FGE Source: Vortexa, FGE
HSFO demand for power generation in South Asia and the Middle East is starting to pick up as these regions head deeper into
summer. HSFO demand is expected to increase due to gas-to-oil switching as a result of persistently high LNG prices. This
will lead to lower exports from the Middle East to Asia in the coming months, providing some support to HSFO cracks.
Russia’s HSFO exports to Asia and the Middle East have continued to increase, according to Vortexa ship-tracking data.
Exports to these regions now make up almost half of Russia’s total HSFO exports, compared to below 20% pre-invasion. We
expect these volumes to gradually increase as Europe slowly phases out more Russian residue ahead of the EU sanctions
deadline on 05 February 2023. So far it has been the US ban on Russian oil that has had the biggest impact.
 Regional Fuel Oil Cracks*
$/bbl unless stated Weekly Averages (w/e) w-o-w Monthly Averages (f'cast)
otherwise 24-Jun-22 01-Jul-22 Change Jul-22 Aug-22 Sep-22
VLSFO (0.5%S) (Calculated using 6.84 bbl/t conversion factor)
NWE/Brent 3.5 4.2 0.7 6.22 5.55 3.43
MED/Urals 40.2 42.0 1.8 41.90 41.56 39.68
USGC/LLS 12.3 15.0 2.7 10.59 8.78 9.06
SING/Dubai 33.6 34.1 0.6 15.64 15.93 13.56
HSFO (3.5%S)
NWE/Brent -31.8 -36.5 -4.7 -24.38 -20.33 -17.05
MED/Urals -2.9 -3.9 -1.0 6.23 10.24 13.75
USGC/LLS -18.1 -17.9 0.2 -17.77 -14.30 -12.17
SING/Dubai -19.3 -21.7 -2.4 -11.10 -7.10 -5.90
Hi-5 Spread (VLSFO-HSFO) ($/t)
Northwest Europe 284 320 36 263 222 188
Mediterranean 334 355 21 296 258 223
US Gulf Coast 253 270 18 249 204 194
Singapore 405 426 20 239 205 183
Benchmark Refinery Margins

Please note that blended/cracked fuel oil margins in the examples below have been valued either as VLSFO (LS) or HSFO
(HS). Similarly, atmospheric residue has been valued at local VLSFO/HSFO prices but with an added gasoil premium.
Hydroskimming Margins
 NWE LS HSK, $/bbl  NWE HS HSK, $/bbl
36 60
32 50
28 40
24
20 30
16 20
12 10
8
4 0
0 -10
-4 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22
Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22
Urals NWE Forties
Brent WTI Bonny Light Arab Light Johan Sverdrup
Source: FGE Source: FGE
 MED LS HSK, $/bbl  MED HS HSK, $/bbl
40 60
30 40
20 20
10 0
0 -20
Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22
Azeri Light Saharan WTI Urals MED CPC Arab Light
 USGC LS HSK, $/bbl  USGC HSK, $/bbl
50 30
40
20
30
20 10
10
0 0
WTI MEH LLS Mars WCS Maya Arab Light

 SING LS HSK, $/bbl  SING HS HSK, $/bbl
80 20
60 15
40 10
5
20
0
0
-5
-20 -10
Minas Brent Dalia WTI ESPO Murban Dubai Arab Light
FCC Margins
 NWE LS FCC, $/bbl  NWE HS FCC, $/bbl
40 60
35 50
30 40
25 30
20 20
15 10
10 0
5 -10
0 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22
Urals NWE Forties
 MED LS FCC, $/bbl  MED HS FCC, $/bbl
45 60
40
35 40
30
25 20
20
15
0
10
5
0 -20

 USGC LS FCC, $/bbl  USGC HS FCC, $/bbl
60 40
30
40
20
20
10
0 0
 SING LS FCC, $/bbl  SING HS FCC, $/bbl
80 30
60 20
40 10
20 0
0 -10
Hydrocracking Margins
 NWE LS HDC, $/bbl  NWE HS HDC, $/bbl
45 70
40 60
35 50
30 40
25 30
20 20
15 10
10 0
5 -10
0 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22
Urals NWE Forties
 MED LS HDC, $/bbl  MED HS HDC, $/bbl
55 70
50
45 60
40 50
35
30 40
25 30
20
15 20
10
5 10
0 0
 USGC LS HDC, $/bbl  USGC HS HDC, $/bbl
60 45
50 40
35
40 30
30 25
20
20 15
10 10
5
0 0
 SING LS HDC, $/bbl  SING HS HDC, $/bbl
90 40
80
70 30
60
50 20
40 10
30
20 0
10
0 -10

Coking Margins
 NWE LS COK, $/bbl  NWE HS COK, $/bbl
50 80
40 60
30 40
20
20
10
0
0
-10 -20
Urals NWE Forties
 MED LS COK, $/bbl  MED HS COK, $/bbl
50 80
40 60
30
40
20
10 20
0 0
 USGC LS COK, $/bbl  USGC HS COK, $/bbl
60 50
40
40 30
20
20
10
0 0
 SING LS COK, $/bbl  SING HS COK, $/bbl
80 36
70 32
60 28
50 24
40 20
30 16
20 12
10 8
0 4
-10 0
-4
 Quarterly World Oil Supply/Demand and Stock Changes
QUARTERLY WORLD OIL SUPPLY/DEMAND & STOCK CHANGE 13th June 2022*
million b/d
2021 1Q22 2Q22 3Q22 4Q22 2022 1Q23 2Q23 3Q23 4Q23 2023
DEMAND
USA 19.77 20.23 20.26 20.51 20.44 20.36 20.36 20.51 20.88 20.80 20.64
Canada/Mexico 4.18 4.17 4.35 4.46 4.48 4.37 4.42 4.35 4.46 4.48 4.43
Brazil 3.20 3.09 3.09 3.27 3.26 3.18 3.01 3.08 3.27 3.23 3.15
Other Latin America 3.87 4.05 4.10 4.03 4.03 4.05 4.13 4.17 4.10 4.08 4.12
Europe 13.77 13.84 14.11 14.52 14.14 14.15 13.90 14.18 14.74 14.31 14.28
FSU Apparent Demand 4.79 5.27 4.19 4.42 4.24 4.53 4.60 4.63 4.83 5.18 4.81
Japan 3.54 3.85 3.19 3.29 3.70 3.51 3.81 3.19 3.26 3.59 3.46
S.Korea/Aus/NZ 3.97 4.18 4.06 4.08 4.27 4.15 4.31 4.21 4.19 4.34 4.26
China Apparent Demand 14.84 15.66 15.82 15.77 16.20 15.86 16.17 16.28 16.38 16.60 16.36
India 4.88 5.24 5.19 4.87 5.29 5.15 5.34 5.33 5.00 5.45 5.28
Other Asia-Pacific 8.68 8.87 8.93 9.16 9.56 9.13 9.54 9.56 9.60 9.88 9.65
Africa 4.10 4.33 4.37 4.32 4.34 4.34 4.58 4.48 4.40 4.42 4.47
Middle East 9.15 9.54 9.30 9.63 9.45 9.48 9.45 9.45 9.72 9.53 9.53
Total Real Demand 99.01 101.26 99.96 102.12 103.22 101.64 103.01 102.99 104.57 105.49 104.02
Total Apparent Demand 98.74 102.32 100.97 102.33 103.41 102.26 103.61 103.42 104.82 105.90 104.44
SUPPLY
USA 16.62 17.17 17.52 18.00 18.46 17.79 18.61 18.85 18.82 19.04 18.83
Canada 5.37 5.44 5.22 5.57 5.60 5.46 5.66 5.31 5.65 5.67 5.57
Mexico 1.95 2.00 1.99 2.00 1.97 1.99 2.09 2.08 2.06 2.04 2.06
Brazil 3.00 3.07 3.06 3.09 3.09 3.08 3.05 3.10 3.20 3.28 3.16
North Sea 2.99 2.96 2.78 2.81 3.05 2.90 3.12 3.02 3.01 3.21 3.09
FSU 13.93 14.58 13.40 13.40 13.33 13.68 13.39 13.84 14.19 14.54 13.99
China 3.98 4.10 4.13 4.06 3.97 4.07 4.08 4.10 4.08 4.09 4.09
Other Non-OPEC Output (incl. Qatar) 10.33 10.41 10.61 10.80 10.87 10.67 10.66 10.64 10.71 10.72 10.68
Total Non-OPEC Output (Crude/NGLs) 58.18 59.71 58.69 59.72 60.35 59.62 60.65 60.93 61.72 62.59 61.47
Bio-liquids (ethanol/bio-gasoline, etc) 2.60 2.70 2.70 2.70 2.70 2.70 2.80 2.80 2.80 2.80 2.80
GTL/CTL 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40 0.40
Processing Gain, balancing item etc 3.90 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Total Non-OPEC Supplies 65.08 66.81 65.79 66.82 67.45 66.72 67.85 68.13 68.92 69.79 68.67
Angola 1.15 1.15 1.16 1.15 1.15 1.15 1.15 1.12 1.09 1.08 1.11
Iran 2.42 2.54 2.38 2.55 2.55 2.50 2.55 2.64 2.54 2.60 2.58
Iraq 4.12 4.30 4.45 4.61 4.64 4.50 4.56 4.68 4.77 4.69 4.67
Libya 1.15 1.11 0.78 0.68 0.84 0.85 1.11 0.99 0.98 1.01 1.02
Nigeria 1.30 1.27 1.19 1.29 1.30 1.26 1.37 1.32 1.26 1.25 1.30
Saudi Arabia 9.09 10.21 10.45 10.76 10.82 10.56 10.74 10.68 10.65 10.54 10.65
Venezuela 0.50 0.62 0.66 0.68 0.68 0.66 0.69 0.71 0.73 0.73 0.71
Other OPEC 6.59 7.08 7.25 7.45 7.47 7.32 7.48 7.52 7.66 7.62 7.57
Total OPEC Crude Output 26.32 28.27 28.33 29.19 29.45 28.81 29.65 29.65 29.68 29.52 29.62
NGLs/other 6.17 6.50 6.50 6.51 6.56 6.52 6.54 6.62 6.58 6.66 6.60
Total OPEC Oil Output 32.49 34.76 34.83 35.69 36.01 35.32 36.19 36.27 36.26 36.18 36.23
Total Oil Supplies 97.56 101.58 100.62 102.52 103.46 102.04 104.04 104.40 105.18 105.97 104.90
STOCK CHANGE (mmb/d)

OECD Company -0.98 -0.26 0.38 0.91 0.11 0.28 0.45 0.57 0.31 -0.15 0.29
Strategic/government -0.18 -0.39 -1.22 -1.20 -0.32 -0.78 0.05 0.16 0.16 0.16 0.14
Non-OECD/transit/floating storage -0.01 -0.31 -0.05 0.04 0.39 0.02 -0.10 -0.10 -0.23 0.25 -0.04
Other Implied Stocks Change -0.00 0.22 0.55 0.43 -0.12 0.27 0.04 0.34 0.11 -0.19 0.08
Implied Stock Change -1.17 -0.74 -0.35 0.19 0.05 -0.21 0.44 0.98 0.36 0.07 0.46
Reference items
Demand change year-on-year 6.2% 5.6% 2.4% 2.1% 0.7% 2.7% 1.7% 3.0% 2.4% 2.2% 2.3%
Call on OPEC crude (no stock change) 27.49 29.01 28.67 29.00 29.39 29.02 29.21 28.67 29.32 29.45 29.16
End-period OECD company stocks (bill bbls) 2.54 2.58 2.66 2.67 2.71 2.77 2.80 2.78
End-period OECD stock cover (days) 56.5 56.0 57.9 56.4 59.8 59.2 60.2 63.7
Crude Prices ($/bbl)

Platts Dated Brent* 71.1 101.4 115.3 120.5 115.4 113.1 103.0 92.3 90.3 87.3 93.3
WTI 68.0 94.5 111.0 114.8 111.8 108.0 98.6 87.0 85.6 83.8 88.7
Dubai 69.20 95.6 110.1 112.0 109.8 106.9 98.9 87.4 86.0 82.7 88.8
Urals NWE 68.50 87.3 80.1 85.5 80.5 83.4 70.7 65.4 68.6 70.5 68.8
Urals Med 69.10 90.2 80.8 86.3 81.3 84.7 71.6 66.0 69.2 71.4 69.6
*Please note that this table is usually only updated once a month; it was last updated on 13th June 2022 © FGE 2022
Source: Platts*, FGE, NYMEX
© 2022 FGE - For queries, please email FGE@fgenergy.com. *Prices in this report marked with the
The dissemination, distribution, or copying by any means source Platts are sourced from S&P
whatsoever without FGE’s prior written consent is strictly Global Platts, © 2022 S&P Global Inc.
prohibited. www.fgenergy.com All rights reserved.

FGE - Weekly Oil Market and Refining Update - 04 July

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FGE - Weekly Oil Market and Refining Update - 04 July

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Weekly Oil Market & Refining Update

India’s surprise export tax caps the downside to diesel

Short-Term Global Oil Service 4 July 2022

•  Benchmark Refinery Margins

Crude: Prices increase on tight supply but the upside is capped by

Refining Developments: Strike action causes ExxonMobil to declare force

 Seaborne Loadings of Russian Oil in June* vs 2021 avg, kb/d, %

 Benchmark Refinery Margins**

Weekly Averages (w/e) w-o-w Monthly Averages (f'cast)

Weekly Averages (w/e) w-o-w Historical Monthly Average

 Global Refinery Runs Outlook

 Global Regional Naphtha Cracks**

Weekly Averages (w/e) w-o-w Monthly Averages (f'cast)

 NYMEX NYH RBOB/WTI Crack, $/bbl  Global Reforming Margins, $bbl

 Global Regional Gasoline Cracks**

Weekly Averages (w/e) w-o-w Monthly Averages (f'cast)

 Global Regional Middle Distillate Cracks*

Weekly Averages (w/e) w-o-w Monthly Averages (f'cast)

 Asia VLSFO Supply, kb/d  Russia HSFO Exports, kb/d

Source: Vortexa, Refinitiv, FGE Source: Vortexa, FGE

 Regional Fuel Oil Cracks*

Benchmark Refinery Margins

 MED LS HSK, $/bbl  MED HS HSK, $/bbl

 USGC LS HSK, $/bbl  USGC HSK, $/bbl

WTI MEH LLS Mars WCS Maya Arab Light

 SING LS HSK, $/bbl  SING HS HSK, $/bbl

 MED LS FCC, $/bbl  MED HS FCC, $/bbl

Azeri Light Saharan WTI Urals MED CPC Arab Light

 USGC LS FCC, $/bbl  USGC HS FCC, $/bbl

 SING LS FCC, $/bbl  SING HS FCC, $/bbl

 MED LS HDC, $/bbl  MED HS HDC, $/bbl

 USGC LS HDC, $/bbl  USGC HS HDC, $/bbl

 SING LS HDC, $/bbl  SING HS HDC, $/bbl

Minas Brent Dalia WTI ESPO Murban Dubai Arab Light

 MED LS COK, $/bbl  MED HS COK, $/bbl

 USGC LS COK, $/bbl  USGC HS COK, $/bbl

 SING LS COK, $/bbl  SING HS COK, $/bbl

 Quarterly World Oil Supply/Demand and Stock Changes

STOCK CHANGE (mmb/d)

Crude Prices ($/bbl)

Source: Platts*, FGE, NYMEX

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