A wide range of ever-changing economic and other forces — domestic and international — are constantly impacting the U.S. refinery complex, for good and for bad. Fluctuations in crude oil supply and prices. Ups and downs in demand for refined products. Refinery closures and expansions. And don’t forget this: the pace of the much-discussed transition to lower-carbon energy sources. There’s a lot at play in the world of gasoline, middle distillates and resid — renewable fuels too — and while industry players can’t fully anticipate what’s next in the refined-product roller coaster ahead, it’s critically important to keep up with the latest developments and to have a deep understanding of the many factors influencing crude oil and fuel markets — and the relationships among those drivers. In today’s RBN blog, we discuss the key findings in a newly released update to Future of Fuels, an in-depth report by RBN’s Refined Fuels Analytics (RFA) practice on everything you need to know about U.S. and global supply and demand for gasoline, diesel, jet fuel and biofuels over the short, medium and long term.
Warning: Today’s blog is an advertorial for RFA’s newly updated Future of Fuels report. Still, the blog — and the report — delve into topics that are highly relevant for a wide range of energy-industry participants and investors.
Even on the best, most terrifying roller coasters, there are moments of relative calm: a long, level patch or a slow, gentle climb before all hell breaks loose. The refining industry — and the still-nascent market for biofuels — often follow a similar pattern, and right now most market participants are breathing somewhat easily. After all, refining margins, while down from their 2022 and early-2023 highs due to the addition of incremental refining capacity and other factors, are still relatively attractive and — as RFA forecasts in its new report — they are likely to stay well above historical norms in 2024 and 2025. Better yet, as we’ll get to, the ongoing round of capacity additions may well be the last blast of the industry's expansion, and with RFA’s expectation that global demand for refined fuels will remain higher for longer than many others predict, refining margins are likely to re-strengthen in the years ahead and stay robust into the early 2040s — yes, 20 years from now.
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