At Least Five European Refineries Cut Runs

At least five refineries in Northwest Europe and the Mediterranean have been reducing output since the second half of April due to weak margins, particularly for gasoline and naphtha, market sources said on Friday.

Kalundborg in Denmark owned by Statoil, Israel's two refineries owned by Paz Oil and ORL, and Petroineos's Grangemouth in Scotland and Lavera in southern France refineries have all reduced output, the sources said.

The companies declined to comment on the cuts or did not respond to requests for comment.

Sweden's two refineries, owned by Preem, have also cut runs traders said, but a spokeswoman for the company denied the change in output.

On Thursday Chinaoil HK offered to sell a cargo of North Sea crude oil in a rare move, which some traders said suggested Petroineos's Grangemouth refinery was reducing output.

Chinaoil is jointly owned by Sinochem and by China National Petroleum Corporation, which also manages and operates it. PetroChina, owned by CNPC, and Ineos have trading and oil refining joint ventures related to Grangemouth and Lavera.

Petroineos also sold Kazakh CPC Blend at a bigger discount than for recent trades in the price assessment window. This grade is run at Lavera, where some traders said there had been run cuts.

Crude and oil product stocks held at European refineries rose in April, according to data from industry monitor Euroilstock, even as crude intake fell. This suggests refineries have been struggling to clear their output and have been forced to cut runs.

Similarly, overall refining margins in northwest Europe have averaged $4.75 a barrel during the last 15 days, according to Reuters data, down from $5.25 a barrel for April.

Meanwhile, margins in the Mediterranean for refineries using medium sour Urals crude fell into negative territory at the start of the week.

Gasoline refining margins also fell to their lowest level since March 20 at the start of May, reflecting the fact that gasoline stocks at the Amsterdam-Rotterdam-Antwerp pricing hub hit a five-year high in early April.

Crude feedstock prices have come off as demand from refineries has weakened.

Algerian crude prices fell to a discount to dated Brent from a premium in late March, for example, whilst North Sea Forties differentials have been under pressure for most of April.