Singapore complex refining margins fell to a five-week low, suggesting fading regional demand and a pickup in supply continue to weigh on most oil products in the region, a report by Merrill Lynch showed Tuesday.
Complex refining margins in Singapore fell by $1.61 to $12.52 a barrel in the week ended June 13, while simple refining margins were down $1.95 at minus $8.36 a barrel, the lowest in at least 18 months. The weakness in simple margins was due mainly to softer fuel oil, whose refining margin hit a fresh record low of minus $31.48 a barrel.
Middle distillates' spot margins also narrowed due to rising regional supply with the maintenance season coming to an end. But gasoil margins were still the best among all products, partly because "strong near term demand from China and Australia are keeping prices on the boil", the report said. Gasoil's refining margins slipped by $1.37 to $39.47 a barrel, while jet kerosene's margins were down $1.88 at $38.22 a barrel.
Gasoline's margins remained strong, though down for the third straight week, largely because China, the largest exporter of gasoline in the region, has become a net importer since May due to continuous domestic shortages. Gasoline spot margins were down $1.84 at $13.34 a barrel.
Bad news for SPC. With a drop in refining margin, SPC bottom line could be hit as well.
Crude Oil price may be heading towards record high but if there is a real demand for oil, shouldnt there be strong demand to refine the products? The rise in Crude Oil could in a large part be due to speculation!
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