FPCC Not Surprised by Saudi Cut Due to Bearish Demand Signals

Saudi Arabia’s cut to crude production in July is not surprising with the bearish signals for demand according to Lin Keh-Yen from Taiwanese refiner Formosa Petrochemical Corp.

• China’s economic recovery and the rebound in jet fuel consumption have come in below expectations said Lin.
• Fuel exports from Taiwan are currently not profitable and focus remains on supplying the domestic market. FPCC announced a cut to processing rates by 30kbpd in June from rates of around 480kbpd due to weak margins. The company will consider making deeper operational cuts should crude prices rise significantly.
• Diesel crack spreads in Europe and US are relatively unchanged today with levels still subdued due to demand concerns and the threat of a US recession combined with stable supplies and above normal Gasoil stocks in Europe.
  • US gasoline crack up 0.8$/bbl at 34.15$/bbl
  • US ULSD crack up 0.3$/bbl at 27.61$/bbl
  • EU Gasoline-Brent up 0.3$/bbl at 18.5$/bbl
  • EU Gasoil-Brent up 0.2$/bbl at 16.07$/bbl