Daily Management Review

IEA notes decline in refineries profitability in April to two-year lows


The IEA noted in its May report that although geopolitical tensions remain high, oil prices fell considerably in April and early May due to concerns about the global economy and rumors of progress in negotiating a truce in the Gaza Strip.

The most notable sell-off was in middle distillate markets, where prices for diesel and jet fuel plummeted and NYMEX month-to-month futures entered contango following years of backwardation, according to analysts.

Global refinery profitability dropped to almost two-year lows in the meantime, leading to discussions about output reductions that would jeopardize the seasonal recovery in refining.

With a heavy reliance on diesel production and weak regional demand, the drop in European refinery profitability surpassed that of the U.S. Gulf Coast and Singapore, lowering the premium required to draw long-distance imports from east of Suez.

source: iea.org