Biggest Oil Buyers Pick Themselves as Winners From OPEC Meeting
“Refining margins in Asia have stayed very strong, certainly much stronger than in 2014, largely because feedstock prices have dropped significantly,” Victor Shum, a vice president at IHS Inc., an Englewood, Colorado-based industry consultant, said by phone from Singapore.
Brent crude, the benchmark for more than half the world’s oil, has dropped about 21 percent this year after falling by almost 50 percent in 2014. Futures in London traded near $45 a barrel on Friday. West Texas Intermediate, the U.S. marker, was near $43 a barrel, down about 42 percent from 12 months earlier.
The Asia-Pacific region will consume 31.87 million barrels a day of oil in 2015, exceeding demand of 31.28 million barrels from the Americas, the International Energy Agency said in a report on Nov. 13. China, India, Japan and South Korea will be among the biggest users of oil, according to the Paris-based IEA.
“For six months to a year, I see markets flush with supply,” said Naveen Kumar, general manager for international trade and supplies at Hindustan Petroleum Corp., an Indian state-run processor. “As a refiner, low crude prices are benefiting us, so we would continue to hope for prices to remain low.”
Oil prices may drop to as low as the mid-$20s a barrel unless OPEC takes action to stabilize the market, Venezuelan Oil Minister Eulogio Del Pino said on Nov. 22. The Latin American nation and Algeria are among OPEC states most affected by crude’s slump and have long urged fellow members to curb output. Saudi Arabia, the world’s largest crude exporter, led the group to switch its strategy in November 2014 to focus on pressuring competitors.
“It is obvious that everyone will continue with their output because they have to sustain their economies,” said H. Kumar, managing director of India’s Mangalore Refinery & Petrochemicals Ltd. “If they reduce, their revenues will come down to that extent. So, this era of everyone sustaining output will continue and this is good for refiners.”
--With assistance from Dhwani Pandya, Tsuyoshi Inajima, Ann Koh and Winnie Zhu.
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