Refinery margins may increase on heels of disaster
Profits from gasoil production in Asia may surged to the highest in 2 ½ years, and fuel oil’s loss narrowed the most in a month after Japan’s biggest earthquake knocked out power plants and refineries, according to a Bloomberg online article. The premium of gasoil, or diesel, to Dubai crude rose 13% to $23.26/bbl, according to data compiled by Bloomberg. Oil’s discount to the benchmark Middle East crude narrowed 36% to $5.18/bbl, the biggest drop since Feb. 14. Utilities and factories may switch to alternatives to replace lost output from nuclear plants.
Japan, the world’s third-largest crude importer, used an average 430,000 bpd of fuel oil in December 2010, according to International Energy Agency estimates, while diesel consumption was 450,000 bpd. Asian fuel-oil premiums doubled in July 2007 after an earthquake shut Tokyo Electric Power Co.’s Kashiwazaki-Kariwa nuclear plant, the worlds biggest. The 8.9-magnitude temblor on March 11 shut 11 reactors and 21 thermal plants, cutting 9% of the power output.
“This is a super bullish factor for the Asian middle distillates and fuel-oil market,” said Akira Koriyama, an energy derivatives trader at Mitsui & Co. in Tokyo. “Factories which have their own generating facilities will begin to buy diesel, while utilities will start purchasing fuel oil.
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