Asian crude refiner's margins plummeted to their lowest levels in almost five months, amid concerns about this Omicron coronavirus variant could cause another setback to the oil demand growth, already battered by the rising number of Covid-19 instances in Europe.
International governments have imposed travel restrictions for travelers from southern Africa over the weekend in order to stop spreading of Omicron that was first identified within South Africa. Researchers are on the hunt to find out if it is than just a virus that can cause more severe illness than the existing varieties. Learn more
This comes at a time when refiners have margins that are low within Asia and Europe were already taking the brunt of recent events since a number of European countries reinstated coronavirus bans to stop the escalating number of COVID-19 cases. Learn more
The double-whammy could derail the recovery of the global economy and, in turn, the demand for oil, which the International Energy Agency expects to increase in the range of 5.5 million barrels per hour (bpd) up to 96.3 million barrels per day by 2021. Read more
"At a time when many travel lanes are reopening, this is a setback," said Howie Lee, an economist at Singapore’s OCBC bank.
"We need at least two weeks to figure out what impact this new variant will have on oil demand."
The new version of the oil caused oil prices to rise on Friday in low post-Thanksgiving levels.
Prices for oil plunged by over 10 per cent on Friday, the biggest daily drop since April 2020. However, they only recouped a small portion of the losses as of 608 GMT on Monday, and were higher by more than 3 per cent for the day. Analysts have said that the Friday price drop was excessive. ,
Singapore's complex margins, which are a gauge of Asian refineries' financial performance were $2.15 per barrel on Friday, the lowest price since June 30, according to data from Refinitiv indicated.
A month ago the margins reached $8.45 per barrel, the highest since September of 2019.
"We are seeing drastic drops in refining margins over the past few days due to concerns over the fast-spreading Omicron coronavirus variant," said an official at a major South Korean refiner, pointing to the growing number of countries imposing travel restrictions as a result of the new variant.
"From a refinery's end, we are facing a double whammy – drops in oil prices and refining margins, which would likely worsen our profitability."
Despite a declining forecast for jet fuels, certain analysts anticipate gasoline demand to remain steady in the near future, since most governments haven't yet put in place restrictions on travel in the country in response to Omicron.
"Jet demand will get killed, but I think gasoline will hang in there," said a Singapore-based analyst who declined to be named due to company policy.
"Europe was already heading into lockdown so that's a wash, so it's more about (gasoline demand in the) U.S. and Asia."
In China strict border control might hinder Omicron away from the world's largest oil importer. However, price drops could be beneficial to Chinese refiners as well as consumers, according to an analyst of the Beijing-based consultancy.
"It's bad news for the world but good news for China as oil prices have dropped significantly," said a China-based analyst, who also declined to be named due to company policy.
(Source:www.usnews.com)
International governments have imposed travel restrictions for travelers from southern Africa over the weekend in order to stop spreading of Omicron that was first identified within South Africa. Researchers are on the hunt to find out if it is than just a virus that can cause more severe illness than the existing varieties. Learn more
This comes at a time when refiners have margins that are low within Asia and Europe were already taking the brunt of recent events since a number of European countries reinstated coronavirus bans to stop the escalating number of COVID-19 cases. Learn more
The double-whammy could derail the recovery of the global economy and, in turn, the demand for oil, which the International Energy Agency expects to increase in the range of 5.5 million barrels per hour (bpd) up to 96.3 million barrels per day by 2021. Read more
"At a time when many travel lanes are reopening, this is a setback," said Howie Lee, an economist at Singapore’s OCBC bank.
"We need at least two weeks to figure out what impact this new variant will have on oil demand."
The new version of the oil caused oil prices to rise on Friday in low post-Thanksgiving levels.
Prices for oil plunged by over 10 per cent on Friday, the biggest daily drop since April 2020. However, they only recouped a small portion of the losses as of 608 GMT on Monday, and were higher by more than 3 per cent for the day. Analysts have said that the Friday price drop was excessive. ,
Singapore's complex margins, which are a gauge of Asian refineries' financial performance were $2.15 per barrel on Friday, the lowest price since June 30, according to data from Refinitiv indicated.
A month ago the margins reached $8.45 per barrel, the highest since September of 2019.
"We are seeing drastic drops in refining margins over the past few days due to concerns over the fast-spreading Omicron coronavirus variant," said an official at a major South Korean refiner, pointing to the growing number of countries imposing travel restrictions as a result of the new variant.
"From a refinery's end, we are facing a double whammy – drops in oil prices and refining margins, which would likely worsen our profitability."
Despite a declining forecast for jet fuels, certain analysts anticipate gasoline demand to remain steady in the near future, since most governments haven't yet put in place restrictions on travel in the country in response to Omicron.
"Jet demand will get killed, but I think gasoline will hang in there," said a Singapore-based analyst who declined to be named due to company policy.
"Europe was already heading into lockdown so that's a wash, so it's more about (gasoline demand in the) U.S. and Asia."
In China strict border control might hinder Omicron away from the world's largest oil importer. However, price drops could be beneficial to Chinese refiners as well as consumers, according to an analyst of the Beijing-based consultancy.
"It's bad news for the world but good news for China as oil prices have dropped significantly," said a China-based analyst, who also declined to be named due to company policy.
(Source:www.usnews.com)
