MID DISTILLATES

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  • Bolstered by legislation and aimed at removing Sulphur, Europe is the world’s largest market for automotive diesel. Nearly half of all diesel cars are bought in the continent and fifty percent of European cars now drive on diesel fuel, compared to five percent in the United States.

  • European diesel demand far outweighs its local refining capacity. This shortfall has had far-reaching implications for refining economics worldwide. Europe has lost a significant portion of its refining capacity and inventories are declining though there are signs of recovery from previous industry stalls. The growing demand for gas oil in emerging economies, especially in the power sector, continues to divert international supply away from European markets.

  • Jet fuel prices are also strengthening again after several years of decline and Civil passenger numbers have recently returned to their pre-recession levels. Airbus and Boeing are predicting 5% annual growth in passenger numbers until 2030. Both markets remain susceptible to environmental regulation meaning increased fuel efficiency will dampen demand. As a result, bio-fuels will increasingly factor in both diesel and jet fuel blends.

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