Industry analysts and executives are expecting robust margins for Asian refineries next year, buoyed by high demand for gasoline in China and India, reports Reuters.
While refinery margins are not likely to return to the high seen in September, they will not sink especially low, despite a slow recovery in oil prices, they said.
Refinery margins, which represent the difference between the price paid for crude and the price at which refinery products are sold, reached a two-year high of $11 per barrel in September but have since dropped to $7 as crude prices made a partial recovery.
“There was a period this year when (refining margins) were good … I don’t think we’ll see that again next year, though I don’t think we’ll see real low margins either – they’ll be fine or average,” said Martin Hawkins, chief operating officer at India’s HPCL-Mittal Energy Ltd.
Singapore hydrocracking margins or complex refining margins, a benchmark for Asia, should average $6.40 a barrel in 2016, down 80 cents from this year’s expected average of $7.20, according to Energy consultancy FGE.
Analysts from BofA Merrill Lynch Global Research said that gasoline demand-growth will continue to drive refining margins as it feeds off low oil prices. India’s gasoline demand has grown by 14% and China’s by 12% so far this year.