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VP Refining, Chemicals & Oil Markets
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When it comes to oils and chemicals, 2023 turned out broadly as we expected. Economic uncertainty set the tone for the oil markets. China’s demand recovery was sluggish, leading to oversupplied downstream markets. Petrochemical producer margins remained under pressure throughout the year, with asset rationalisation a common theme across base chemicals.
Both oil prices and refining margins were lower at the end of 2023 than 2022, refining margins markedly so. These values mask another volatile year in which the global crude oil and refined market proved its resilience amid significant geopolitical challenges.
But what’s ahead for the next 12 months? We set out our predictions in Oils & chemicals: 5 things to watch for in 2024. Fill in the form to get your complimentary copy, and read on for an overview of some of the key themes.
China continues to lead oil demand growth
Our outlook on the fundamentals guides us to a more balanced environment for oil and refining in 2024. Oil demand will continue to break records, with annual demand growth of around 2 million b/d projected, skewed towards the second half of next year. China continues to lead, with growth around 0.53 million b/d in 2024.
Meanwhile, other emerging markets in Asia, as well as the US, will also be key growth markets this year. Read the full report to see charts on oil demand growth by market, plus a look at the impact of OPEC+ production cuts on oil market balance.
The US remains awash in propane as supply continues to outpace demand – with implications for naphtha
Barring a cold winter, 2024 is shaping up to be a bad year for propane. As the surplus must clear into China’s naphtha crackers, it does not bode well for naphtha either.
Declining rig counts could alleviate supply pressure, despite the fact that gas production, driven by LNG demand, is forecast to increase.
Download the full report for more detail on the US propane/propylene inventory forecast.
The refining sector to remain middle distillate led, with high utilisation rates
The refining sector will remain middle distillate led in 2024, with distillate pool yield to rise from a heavier global crude slate as OPEC+ production returns. Capacity additions will be modest, supporting high refinery utilisation rates, with demand growth met from the successful ramp-up of Middle East capacity and the new Dangote refinery in Nigeria.
What are the implications for the chemicals industry? Overcapacity will be an overarching theme, but could some sectors see strong demand? Find out more in the full report.