Global refinery closures outweigh new capacity in 2021: IEA
2021 ends "on a high note" for global industry
Capacity additions in 2022 could weigh on margins
Refinery closures outweighed new capacity in 2021, leading to a drop in global capacity for the first time in 30 years, the International Energy Agency said in its latest monthly report Jan. 19.
Global capacity fell by 730,000 b/d last year as close to 1.6 million b/d was shut or converted into bio-refineries and only 850,000 b/d new capacity came online. For 2022 the IEA forecasts 1.2 million b/d of new additions, while runs will rise by 3.7 million b/d to 81.2 million b/d.
However, the reduced capacity last year led to improved refining margins, which "reached multi-year highs in Singapore and Europe at the end of 2021."
Last year thus ended "on a high note" for the global refining industry, the IEA said, as both runs and margins improved "amid continuously tight product markets" in the last quarter of the year.
Overall, 2021 gained 4.9 million b/d in terms of global refinery crude throughput to 80.2 million b/d.
The IEA revised upwards its November global refinery crude throughput estimates by almost 1 million b/d to 80.8 million b/d "on stronger-than-expected activity in China, India and Europe." However, December runs are likely to ease by 500,000 b/d to 80.3 million b/d as refineries in China reduce their processing.
Although runs increased in the fourth quarter, the agency estimated an "implied draw" of 1.3 million b/d in refined products as the increase was from a "low base" in the third quarter.
However, new additions in 2022 and the subsequent increase of global runs could outpace the demand growth for refined products, "possibly leading to an unwinding of some of the refinery margin gains from late last year," it said
New additions, closures New capacity is already coming up in China, according to S&P Global Platts data. China's privately held refining complex Shenghong Petrochemical is likely to start to feed crudes into its newly built 16 million mt/year crude distillation unit at the end of January. The refinery had initially planned to start up at the end of August.
Private refiner Zhejiang Petroleum & Chemical fully started up commercial operations at it 400,000 b/d phase 2 refining and petrochemical project in early January.
Elsewhere in Asia-Pacific, Pengerang Refining and Petrochemical integrated complex, also known as PRefChem, is expected to resume operations in the second quarter, possibly in May, after previously planning a 2021 restart. The refinery, also known as RAPID refinery, delayed its restart several times following a fire that broke out at the diesel unit in March 2020.
Nigeria's Dangote refinery is on track to be operational from early this year despite some delays caused by shipping constraints.
Two new additions in the Middle East -- Saudi Arabia's Jazan and Kuwait's Al-Zour -- appear to be on track for a full start in 2022.
In January, Iran launched the first phase of a 70,000 b/d extra heavy crude plant on Qeshm island in the Persian Gulf.
The new capacities follow a spate of closures or capacity reductions and conversions in 2020 and 2021.
Gunvor mothballed its Antwerp refinery and shuttered the two crude processing units at Rotterdam.
Petroineos' Grangemouth refinery in Scotland saw its capacity reduced by 30% to around 150,000 b/d after the closure of a CDU and the FCC.
TotalEnergies' Grandpuits stopped crude processing in early 2021, ahead of conversion, while Portugal's Porto and Finland's Naantali also halted crude processing early last year and Norway's Slagen in mid-2021.
Australia is now left with only two refineries after the closure of Altona and Kwinana, while New Zealand will see its only refinery Marsden Point convert into an import terminal from April.
In the Philippines, Tabanagao refinery was shut in 2020 and converted into a terminal.
Similarly in South Africa, Engen's Durban refinery has been offline throughout 2021 to be converted into a terminal.
However, in 2022 another refinery in South Africa, Astron Energy's Cape Town, is expected to restart.
Meanwhile, a number of refineries in North America, including Cheyenne, Rodeo, Martinez are converting into bio-refineries.
#MPC, #PSX, #HFC, #CVE
d
Taking others are their word, their exit is premature... An excellent earnings report is due at the end of January, this climbs to between $94 -$95 by Feb 1st, and the next ex-dividend date is just over 2 weeks into February.. as PSX continues reward the shareholders by making it rain $$$$$$$$$$$$$$
Fri, January 14, 2022, 5:02 AM (Bloomberg) -- Diesel markets are jumping everywhere, a positive indicator for oil prices more widely.
In Asia, the lowest inventories in years have driven margins from making the fuel to a four-month high. Winter there is chillier than usual and demand for transport, industrial and heating fuels are getting a boost.
The continent is contending with significantly less supply from China, after the oil refining giant slashed its fuel export quotas in the first allocation for 2022.
In the U.S., diesel prices have surged to highs not seen since 2014, driving up the cost of trucking, farming and -- in parts of the country -- heating homes. The surge is a blow to the Biden administration’s efforts to tame inflation.
They’ve surged as U.S. refiners began a heavy maintenance season this month, when stockpiles there are already at eight-year lows. A fire at one of the country’s largest refineries took out even more fuel-making capacity at the end of last year.
Rising jet fuel demand has also eaten into diesel output in recent months because refiners have scope to toggle between diesel and jet fuel, and they’re increasingly choosing the latter.
That leaves Europe as the last big diesel-consuming center, and the market is strong there too in part because of the global effect of China’s reduced exports.
So-called crack spreads, the fuel’s margin to crude, and time spreads that denote the strength of immediate supply-demand balances are rallying hard.
Despite the strong market in Europe, the continent is still set to send large cargoes of the fuel to the U.S., further tightening the region’s market.
The strong prices are a positive sign for the wider oil market. Diesel -- consumed in cars, trucks and heavy machinery among other things -- drives the cost of a wider group of petroleum products known as middle distillates that collectively account for about a third of the world’s fuel consumption.
#MPC, #PSX, #HFC, #CVE
m
Imagine Microsoft offering $95 for psx.... SOLD!!! LOL
UPDATE 1-U.S. Energy Dept names 6 companies winners in sale of strategic crude reserves 3:05pm ET, 01/13/2022 - Reuters (Adds details from statement)
Jan 13 (Reuters) - The U.S. Energy Department said on Thursday that six companies were named winners in the sale of U.S. strategic crude reserves.
The Energy Department sold 18.1 million barrels of Strategic Petroleum Reserve (SPR) crude oil to Valero Marketing and Supply, Phillips 66, Motiva Enterprises, Marathon Petroleum, Gunvor USA and Exxon Mobil, the department said in a statement.
Valero Marketing and Supply bought more than 8 million barrels.
The SPR plans to schedule deliveries between Feb. 1 and March 31, with early deliveries available in January if arrangements can be made, the department said.
The congressionally mandated sale completes the requirement of the Bipartisan Budget Act of 2018 to sell a total of 30 million barrels during fiscal years 2022–2025, the Energy Department added.
A total of 14 companies had submitted 111 bids for evaluation
Unfortunately, today's EIA report showing gasoline inventories increasing by 8.0 million barrels last week was a punch in the stomach to what was a nice refiner ralley. Distillate fuel inventories also increased by 2.5 million barrels. Hopefully this is not a trend. #MPC #PSX
2022 Outlook: The Rubber Meets the Road – MS January 12, 2012 Despite near-term COVID-related risks, we are optimistic that 2022 will be a year of continued recovery in refined product demand, with jet fuel a key contributor.
Commodity futures look robust, but equity valuations less so, suggesting a favorable setup for the group in 2022. Signs of recovery in 2021, but not there yet…The R&M group rallied ~25% in 2021, but ultimately performed in-line with the S&P 500. Product pricing moved higher with crude prices, and importantly, crack spreads were quite robust in 2H21. Product stocks remain low, suggesting a continued need for high pricing to stimulate strong refinery runs. Yet, the industry is trading at a decade low absolute discount vs. the market. We therefore see upside not only to consensus estimates but to industry-wide multiples as well.
This looks to be the year when the proverbial rubber meets the road in proving out bull/bear cases for the future of refined product demand. We are of the view that the pandemic has not structurally altered the course of near-term refined product demand. We expect robust diesel demand, stable gasoline demand, and, perhaps more controversially, a meaningful recovery in jet fuel demand in 2H22. We summarize three key debates we see driving the sector in 2022(more inside):
-Will refined product demand look structurally different "post-COVID"? We are generally of the view that, in the near term, trends in global transportation have not been meaningfully altered by the pandemic. Jet demand is the most important to watch.
-Is the high-return for renewable diesel (RD) already over? High supply growth is somewhat concerning, but federal and state policy support, as well as actual project ramp-ups, are key catalysts. We remain upbeat on RD earnings power.
-Can refiners thrive in a world of E&P capital discipline and OPEC+ control? Crude supply will likely remain tighter than last cycle, but a lot of heavy and medium barrels will be coming to market in 2022 to ease some pressure on complex refiners.
Top picks for 2022: VLO is our top large cap pick on meaningful upside revision potential. HFC and MPC (both rated OW) have "de-risking" catalysts ahead, though we're less tactically bullish on these two. We remain UW DK and EW PBF and PSX, but are tactically constructive on PBF.
Ratings and Price Targets Delek US Holdings Inc - UW, Price Target $23.00 to $19.00 Holly Frontier Corp - OW, Price Target $48.00 to $44.00 Marathon Petroleum - OW, Price Target $85.00 unchanged PBF Energy Inc – EW, Price Target $17.00 to $20.00 Phillips 66 - EW, Price Target $95.00 to $100.00 Valero Energy Corporation – OW, Price Target $92.00 to $100.00 #MPC #PSX
For what it's worth HOUSTON (Reuters) 1/12/22 - Negotiators for the United Steelworkers union and Marathon Petroleum Corp, which is representing oil refiners and chemical makers, are scheduled to begin talks on Thursday on a new contract for 30,000 workers across the United States. The existing national bargaining agreement expires Feb. 1. #VLO #PSX
b
This is going back above $100, perhaps above $110-115. Thank you JoeB for 3-digit oil
M
Noticed COP is close to overtaking PSX for share price. Figured it was a great day for stroll down memory lane..
"ConocoPhillips and Phillips 66 are both well-known names in the oil & gas industry. While both companies have roots that trace back over a century, Phillips 66 is a newcomer on Wall Street, having spun off from its parent ConocoPhillips in 2012. In this piece, we take a look at how the two companies have fared since their split, comparing market capitalization, performance, and dividend histories. The Spin Off
In 2012, ConocoPhillips (COP ) spun off its downstream assets and midstream assets to create the independent energy company Phillips 66 (PSX ). Prior to the spin off, ConocoPhillips was the fifth largest integrated oil company in the world, after it had merged with Phillips Petroleum in 2002.
On April 30, 2012, ConocoPhillip investors received one share of Phillips 66 for every two Conoco shares owned. Commenting on the spin-off, the new chairman and CEO of Phillips 66, Greg Garland, stated “Phillips 66 will be clearly differentiated from pure-play refining companies with specific plans for enhancing returns and growing shareholder distributions. We have an exciting future ahead of us.” Market Cap
Currently, ConocoPhillips has a market capitalization of nearly $77 billion. Phillips 66′s market cap comes in at just over $32 billion, an impressive size considering the newly formed company’s relatively short trading history. On its first day of trading, PSX closed with a market cap of about $20.5 billion; and within two years the company more than doubled in size [see also The Ten Commandments of Dividend Investing]. Performance
Since its first day of trading on May 1, 2012, Phillips 66 has gained over 150%. The stock took a slight dip in the second quarter of 2013, but was able to pick up steam once again towards the end of that year. Since the spin-off, ConocoPhillips has also performed relatively well; though the older, more established company did not log in triple digit gains like PSX did. Overall, both companies seemed to have benefited from the split."
A
I've been buying this stock using a DRIP, $100 a month, for like 3-4 years. It's been down for so long but I stuck with it. Nice to see it popping up again.
j
🙏🏻 TODAY is the DAY!!!!!!! See ya later Mikey. Take your profits ....sell sell sell. See ya later bud.. 👋 👋 👋
F
* Phillips 66 : Barclays raises target price to $95 from $82 * Phillips 66 : Morgan Stanley raises target price to $100 from $95 * Phillips 66 Partners LP : Mizuho raises target price to $43 from $41
The run for MPC, XOM, PSX, VLO, APA, OXY, CVX, TTE has only begun, every 30 days will be a bump up through June 2022 Enjoy :)
G
I had a dream, oil stocks doubled!
b
We are up on strong volume while others are down. Are there any news?
d
about time should be at least 100 soon
m
Between the DemoCommy war on oil & overwhelming Hyped EV FAILURE to come. Americans will soon see $5. gas nationwide. PSX should of been $90. months ago. Based on the "Bingo" energy plan, It's a very real chance PSX could break $100.+ when the Energy crisis hits! If the big energy companies wake up & REALIZE the "Economy of Scale" SAVINGS, a PSX BUYOUT is totally logical @ even $95+!
2021 ends "on a high note" for global industry
Capacity additions in 2022 could weigh on margins
Refinery closures outweighed new capacity in 2021, leading to a drop in global capacity for the first time in 30 years, the International Energy Agency said in its latest monthly report Jan. 19.
Global capacity fell by 730,000 b/d last year as close to 1.6 million b/d was shut or converted into bio-refineries and only 850,000 b/d new capacity came online.
For 2022 the IEA forecasts 1.2 million b/d of new additions, while runs will rise by 3.7 million b/d to 81.2 million b/d.
However, the reduced capacity last year led to improved refining margins, which "reached multi-year highs in Singapore and Europe at the end of 2021."
Last year thus ended "on a high note" for the global refining industry, the IEA said, as both runs and margins improved "amid continuously tight product markets" in the last quarter of the year.
Overall, 2021 gained 4.9 million b/d in terms of global refinery crude throughput to 80.2 million b/d.
The IEA revised upwards its November global refinery crude throughput estimates by almost 1 million b/d to 80.8 million b/d "on stronger-than-expected activity in China, India and Europe." However, December runs are likely to ease by 500,000 b/d to 80.3 million b/d as refineries in China reduce their processing.
Although runs increased in the fourth quarter, the agency estimated an "implied draw" of 1.3 million b/d in refined products as the increase was from a "low base" in the third quarter.
However, new additions in 2022 and the subsequent increase of global runs could outpace the demand growth for refined products, "possibly leading to an unwinding of some of the refinery margin gains from late last year," it said
New additions, closures
New capacity is already coming up in China, according to S&P Global Platts data. China's privately held refining complex Shenghong Petrochemical is likely to start to feed crudes into its newly built 16 million mt/year crude distillation unit at the end of January. The refinery had initially planned to start up at the end of August.
Private refiner Zhejiang Petroleum & Chemical fully started up commercial operations at it 400,000 b/d phase 2 refining and petrochemical project in early January.
Elsewhere in Asia-Pacific, Pengerang Refining and Petrochemical integrated complex, also known as PRefChem, is expected to resume operations in the second quarter, possibly in May, after previously planning a 2021 restart. The refinery, also known as RAPID refinery, delayed its restart several times following a fire that broke out at the diesel unit in March 2020.
Nigeria's Dangote refinery is on track to be operational from early this year despite some delays caused by shipping constraints.
Two new additions in the Middle East -- Saudi Arabia's Jazan and Kuwait's Al-Zour -- appear to be on track for a full start in 2022.
In January, Iran launched the first phase of a 70,000 b/d extra heavy crude plant on Qeshm island in the Persian Gulf.
The new capacities follow a spate of closures or capacity reductions and conversions in 2020 and 2021.
Gunvor mothballed its Antwerp refinery and shuttered the two crude processing units at Rotterdam.
Petroineos' Grangemouth refinery in Scotland saw its capacity reduced by 30% to around 150,000 b/d after the closure of a CDU and the FCC.
TotalEnergies' Grandpuits stopped crude processing in early 2021, ahead of conversion, while Portugal's Porto and Finland's Naantali also halted crude processing early last year and Norway's Slagen in mid-2021.
Australia is now left with only two refineries after the closure of Altona and Kwinana, while New Zealand will see its only refinery Marsden Point convert into an import terminal from April.
In the Philippines, Tabanagao refinery was shut in 2020 and converted into a terminal.
Similarly in South Africa, Engen's Durban refinery has been offline throughout 2021 to be converted into a terminal.
However, in 2022 another refinery in South Africa, Astron Energy's Cape Town, is expected to restart.
Meanwhile, a number of refineries in North America, including Cheyenne, Rodeo, Martinez are converting into bio-refineries.
#MPC, #PSX, #HFC, #CVE
Diesel Markets Are Soaring All Over the World
Fri, January 14, 2022, 5:02 AM
(Bloomberg) -- Diesel markets are jumping everywhere, a positive indicator for oil prices more widely.
In Asia, the lowest inventories in years have driven margins from making the fuel to a four-month high. Winter there is chillier than usual and demand for transport, industrial and heating fuels are getting a boost.
The continent is contending with significantly less supply from China, after the oil refining giant slashed its fuel export quotas in the first allocation for 2022.
In the U.S., diesel prices have surged to highs not seen since 2014, driving up the cost of trucking, farming and -- in parts of the country -- heating homes. The surge is a blow to the Biden administration’s efforts to tame inflation.
They’ve surged as U.S. refiners began a heavy maintenance season this month, when stockpiles there are already at eight-year lows. A fire at one of the country’s largest refineries took out even more fuel-making capacity at the end of last year.
Rising jet fuel demand has also eaten into diesel output in recent months because refiners have scope to toggle between diesel and jet fuel, and they’re increasingly choosing the latter.
That leaves Europe as the last big diesel-consuming center, and the market is strong there too in part because of the global effect of China’s reduced exports.
So-called crack spreads, the fuel’s margin to crude, and time spreads that denote the strength of immediate supply-demand balances are rallying hard.
Despite the strong market in Europe, the continent is still set to send large cargoes of the fuel to the U.S., further tightening the region’s market.
The strong prices are a positive sign for the wider oil market. Diesel -- consumed in cars, trucks and heavy machinery among other things -- drives the cost of a wider group of petroleum products known as middle distillates that collectively account for about a third of the world’s fuel consumption.
#MPC, #PSX, #HFC, #CVE
3:05pm ET, 01/13/2022 - Reuters
(Adds details from statement)
Jan 13 (Reuters) - The U.S. Energy Department said on Thursday that six companies were named winners in the sale of U.S. strategic crude reserves.
The Energy Department sold 18.1 million barrels of Strategic Petroleum Reserve (SPR) crude oil to Valero Marketing and Supply, Phillips 66, Motiva Enterprises, Marathon Petroleum, Gunvor USA and Exxon Mobil, the department said in a statement.
Valero Marketing and Supply bought more than 8 million barrels.
The SPR plans to schedule deliveries between Feb. 1 and March 31, with early deliveries available in January if arrangements can be made, the department said.
The congressionally mandated sale completes the requirement of the Bipartisan Budget Act of 2018 to sell a total of 30 million barrels during fiscal years 2022–2025, the Energy Department added.
A total of 14 companies had submitted 111 bids for evaluation
#MPC, #PSX
Despite near-term COVID-related risks, we are optimistic that 2022 will be a year of continued recovery in refined product demand, with jet fuel a key contributor.
Commodity futures look robust, but equity valuations less so, suggesting a favorable setup for the group in 2022. Signs of recovery in 2021, but not there yet…The R&M group rallied ~25% in 2021, but ultimately performed in-line with the S&P 500. Product pricing moved higher with crude prices, and importantly, crack spreads were quite robust in 2H21. Product stocks remain low, suggesting a continued need for high pricing to stimulate strong refinery runs. Yet, the industry is trading at a decade low absolute discount vs. the market. We therefore see upside not only to consensus estimates but to industry-wide multiples as well.
This looks to be the year when the proverbial rubber meets the road in proving out bull/bear cases for the future of refined product demand. We are of the view that the pandemic has not structurally altered the course of near-term refined product demand. We expect robust diesel demand, stable gasoline demand, and, perhaps more controversially, a meaningful recovery in jet fuel demand in 2H22. We summarize three key debates we see driving the sector in 2022(more inside):
-Will refined product demand look structurally different "post-COVID"? We are generally of the view that, in the near term, trends in global transportation have not been meaningfully altered by the pandemic. Jet demand is the most important to watch.
-Is the high-return for renewable diesel (RD) already over? High supply growth is somewhat concerning, but federal and state policy support, as well as actual project ramp-ups, are key catalysts. We remain upbeat on RD earnings power.
-Can refiners thrive in a world of E&P capital discipline and OPEC+ control? Crude supply will likely remain tighter than last cycle, but a lot of heavy and medium barrels will be coming to market in 2022 to ease some pressure on complex refiners.
Top picks for 2022: VLO is our top large cap pick on meaningful upside revision potential. HFC and MPC (both rated OW) have "de-risking" catalysts ahead, though we're less tactically bullish on these two. We remain UW DK and EW PBF and PSX, but are tactically constructive on PBF.
Ratings and Price Targets
Delek US Holdings Inc - UW, Price Target $23.00 to $19.00
Holly Frontier Corp - OW, Price Target $48.00 to $44.00
Marathon Petroleum - OW, Price Target $85.00 unchanged
PBF Energy Inc – EW, Price Target $17.00 to $20.00
Phillips 66 - EW, Price Target $95.00 to $100.00
Valero Energy Corporation – OW, Price Target $92.00 to $100.00
#MPC #PSX
HOUSTON (Reuters) 1/12/22 - Negotiators for the United Steelworkers union and Marathon Petroleum Corp, which is representing oil refiners and chemical makers, are scheduled to begin talks on Thursday on a new contract for 30,000 workers across the United States.
The existing national bargaining agreement expires Feb. 1. #VLO #PSX
"ConocoPhillips and Phillips 66 are both well-known names in the oil & gas industry. While both companies have roots that trace back over a century, Phillips 66 is a newcomer on Wall Street, having spun off from its parent ConocoPhillips in 2012. In this piece, we take a look at how the two companies have fared since their split, comparing market capitalization, performance, and dividend histories.
The Spin Off
In 2012, ConocoPhillips (COP ) spun off its downstream assets and midstream assets to create the independent energy company Phillips 66 (PSX ). Prior to the spin off, ConocoPhillips was the fifth largest integrated oil company in the world, after it had merged with Phillips Petroleum in 2002.
On April 30, 2012, ConocoPhillip investors received one share of Phillips 66 for every two Conoco shares owned. Commenting on the spin-off, the new chairman and CEO of Phillips 66, Greg Garland, stated “Phillips 66 will be clearly differentiated from pure-play refining companies with specific plans for enhancing returns and growing shareholder distributions. We have an exciting future ahead of us.”
Market Cap
Currently, ConocoPhillips has a market capitalization of nearly $77 billion. Phillips 66′s market cap comes in at just over $32 billion, an impressive size considering the newly formed company’s relatively short trading history. On its first day of trading, PSX closed with a market cap of about $20.5 billion; and within two years the company more than doubled in size [see also The Ten Commandments of Dividend Investing].
Performance
Since its first day of trading on May 1, 2012, Phillips 66 has gained over 150%. The stock took a slight dip in the second quarter of 2013, but was able to pick up steam once again towards the end of that year. Since the spin-off, ConocoPhillips has also performed relatively well; though the older, more established company did not log in triple digit gains like PSX did. Overall, both companies seemed to have benefited from the split."
* Phillips 66 : Morgan Stanley raises target price to $100 from $95
* Phillips 66 Partners LP : Mizuho raises target price to $43 from $41
#MPC, #PSX, #HFC, #COP, #CVE, #ENB
PSX should of been $90. months ago. Based on the "Bingo" energy plan, It's a very real chance PSX could break $100.+ when the Energy crisis hits! If the big energy companies wake up & REALIZE the "Economy of Scale" SAVINGS, a PSX BUYOUT is totally logical @ even $95+!