High refining margins and outages at US refineries due to Hurricane Isaac and the fire at Venezuela's 645,000 b/d Amuay refinery had led Asian refiners to operate at higher capacity, trading sources said this week.
"Margins are fantastic, people are definitely running at full [capacity] following Amuay and USGC outages people need to run [at higher rates], the lack of refining capacity needs to be covered," a trader said Friday. "Asian refiners have to and are incentivised to run flat out."
An uptick in refined product cracks, particularly for middle distillates, has supported the margins. Fuel oil cracks that had been falling, has seen a recovery recently.
The kerosene to Dubai crude front-month crack swap has been above $20/barrel since Friday last week, assessed at $20.85/b on Thursday, up from the end of July when it was $18.09/b.
For fuel oil, the 180 CST crack swap to Dubai was assessed at minus $2.52/b on Thursday, lower than minus $1.10/b at the end of July, but above the recent low of minus $4.03/b on August 21.
"I think cracks, especially dirty cracks, look well supported regardless," another trader said Thursday. "Refiners should run [their plants at maximum rates]."
Through August, the Dubai crude cracking refining margin in Singapore has averaged $6.17/b, rising to $7.30/b on August 10, the highest in 10 months. In July, it averaged $4.46/b.
The Dubai cracking margin is calculated using a netback published by the consulting engineering firm of Turner, Mason & Co., compared with the daily assessment of Dubai crude.
Platts publishes yields and netbacks produced by Platts Daily Yield, a joint venture between Platts and the consulting engineering firm of Turner, Mason & Co. All yields and netbacks in Platts Crude Oil Marketwire are produced using Platts product assessments and Turner & Mason's TMMS refinery modeling platform, configured to represent actual processing capabilities in specific regional centers based on a survey of operating refineries to be updated annually.
