Global distillate demand to rebound, says consultant

23 March 2010 18:32  [Source: ICIS news]

PHOENIX (ICIS news)--Global demand for distillate fuel is expected to increase eventually as the economy recovers and Europe increase diesel fuel usage, an energy consultant said on Tuesday.

“Although distillate consumption was negatively impacted more severely than gasoline during the global recession, distillate demand is widely expected to increase as world economies recover and subsequently expand,” said Rick Thomas of consultancy Baker & O’Brien at a technical session of the 108th annual meeting of the National Petrochemical and Refiners Association (NPRA).

Thomas said that gasoline demand in North America and Europe would stall as consumers shift to more fuel efficient automobiles, renewable fuels such as ethanol are substituted, and consumer gasoline prices increase resulting from carbon regulations.

Gasoline prices, which are currently higher than diesel fuels, will likely fall under diesel prices within the year, and refiners that are more oriented toward distillates should benefit from such a trend, Thomas said.

A significant change in the gasoline/distillate price differential can have a large impact on the relative competitiveness of certain refiners, Thomas said.

“European refiners generally yield a higher portion of distillate compared with US refiners,” Thomas said.

More than 1,400 refining and petrochemical executives gathered at the NPRA meeting, according to the association. The meeting continued through Tuesday.

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By: Steven McGinn
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