Modest Middle Distillate Growth Despite Mega Refining Projects

From the end of 2018 to early 2019, three refining projects will start operations, adding total crude distillation capacity of 900,000 b/d. ESAI Energy estimates that the resulting increase in refined product output in 2019 will be 140,000 b/d for gasoline, 30,000 b/d for diesel, and 80,000 b/d for jet. This relatively modest growth is due to the petrochemical focus of the new projects as well as lower utilization rates of some other refiners facing tough competition.

Weak Currencies, Trade Tensions to Dent Demand Growth

Increasing subsidies will not fully offset higher fuel prices in most Asian countries in 2019, and weaker currencies and slower economic growth will not help. Transportation fuel demand growth outside of China will decelerate to 300,000 b/d in 2019, after growing by 340,000 b/d in 2018. In China, demand will return to modest growth next year after collapsing in 2018.