Falling crude prices have triggered better European refining margins since July, according to delegates at a refining conference in Brussels.
Ample supply and downward revisions in demand outlooks pushed down the outright crude price, which recently dropped below $100/b.
"The slump in crude has buoyed 2014 summer margins," David Fyfe, Gunvor's head of market research and analysis, said.
Toril Bosoni, senior oil market analyst at the International Energy Agency, said margins had also been helped by the fact that product prices had not fallen as much as crude prices.
"We've seen hydroskimming plants return to positive territory for the first time since 2012," said Bosoni.
The rebound follows margins having dropped, in the case of French refining, to the lowest ever at the start of 2014, according to Isabelle Muller, director general of the French refining industry association UFIP.
But while European refiners have benefited from the drop in crude prices, they have also become more flexible in adjusting their runs to the level of margins.
In the past, throughputs were mostly affected by seasonal maintenance.
Refinery throughput in June fell by 1.2 million b/d year-on-year. But in July, when margins started recovering, there was a sharp increase in runs, according to IEA data.
"Less of a seasonal drop is expected in September and October compared with last year, said Bosoni. "But margins are still relatively low. It nothing like the golden days of 2007."
LOW RATES
Many refiners in Europe have opted to run at reduced rates of around 70-75%, according to delegates.
But they are still not enough to give good results, said Patrick Pouyanne, Total's president for refining and petrochemicals.
Delegates said US refineries were operating at 88-90% utilization rates which were considered a good level for margins.
Marek Herra, production director at Grupa Lotos, said its Gdansk refinery was operating at 90% rates, which was higher than the average.
"Today's margins on diesel are lower than expected, but still very healthy," he said.
But concerns are rising that upgraded capacity coming online in the next two years will put pressure on margins.
"We had a temporary uptick of margins in the summer of 2014. But with refinery additions exceeding demand growth, how long will margins be sustained?" Gunvor's Fyfe asked rhetorically.
