New Coking Capacity Reduces Fuel Oil and Lifts Heavy Crude Demand
Boston, MA, June 22, 2016 - According to ESAI Energy’s June Global Refining Outlook, The FSU, Latin America, Europe and Africa will add more than 360 Mbd of coking and solvent de-asphalting capacity between July 2015 and end of 2017. In the past, heavy residue upgrading capacity has been added mainly in North America, Asia and the Middle East.
Meanwhile, the FSU, Latin America, Europe and Africa have remained significant fuel oil producers and exporters, accounting for roughly 50 percent of global fuel oil production in 2015. “New heavy fuel oil upgrading investments in these regions will lower fuel oil production by as much as 300Mbd and raise heavy sour crude demand by more than 200Mbd by the end of 2017” says Chris Barber, ESAI Energy’s Refining Analyst. “These traditional heavy residue and fuel oil exporters are building to process difficult feedstock, but have gone under the radar because they are not in the US, Asia or the Middle East,” continues Barber.
These developments on the margin of the heavy oil markets will support fuel oil and heavy crude prices, narrowing fuel oil spreads and containing heavy crude differentials.
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