(EnergyAsia, December 19 2011, Monday) — US energy consultant ESAI has released a study, Global Oil Trends 2012-2013, focusing on the impact of seven trends on the world oil markets in 2012 and 2013.
These include refining capacity expansion, rising caution towards nuclear energy, tighter regulations on shipping carbon emissions, a slowdown in the supply and demand of alternative fuels, growth in the petrochemicals industry, the continuing boom in non-conventional oil and gas, and the struggle to reform the financial sector.
A press release issued by the Wakefield, Massachusetts company did not mention if the study had considered the impact of geopolitical developments and military conflicts on global oil flows.
ESAI said the reduction in refining capacity along the US East coast will weaken the light sweet crude premium and enlarge the market for European gasoline exports, which in turn will reorient global gasoline flows.
“The addition of almost three million b/d of refining capacity in 2012 and 2013, half of which is in Asia, will keep the region long some petroleum products despite healthy demand growth.
“The addition of 1.2 million b/d of coking and hydro-cracking capacity will contribute to the volume of clean light products, and destroy fuel oil, especially in the Atlantic Basin. This will narrow the ultra-low sulphur diesel vs high sulphur fuel oil spread.
“Refining capacity expansions will redraw the global diesel trade map. For example, the US will export more, Europe is likely to import less. Brazil will import more. China may end up importing.”
ESAI said countries will hesitate to expand the use of nuclear power, preferring to use fuel oil. It predicts that by end-2013 it will be clear just how many countries will reconsider the role of nuclear power in their energy mix.
The study expects stricter shipping emissions controls to boost demand for low sulphur fuel oil, and encourage marine diesel on the margin of the bunker market.
ESAI expects a slowdown in the growth of the biofuels industry. Ethanol and bio-diesel have penetrated the transport fuels markets at a steady clip over the last few years, but will be affected by the limitations of existing mandates and the absence of second generation bio-fuels.
While vehicle technologies will proliferate due to better fuel economy in the US and China, ESAI said this trend will have only a marginal impact on gasoline demand.
The study sees a bright future for natural gas-based liquid fuels due to the price advantage of natural gas in some regions.
Petrochemicals consumption could be affected by the inability of China’s refineries to produce enough light naphtha feedstock. On the other hand, ESAI sees India becoming a bigger supplier to the rest of Asia.
“While it’s not clear that India’s surplus will meet China’s deficit directly, India’s supplies to other Asian countries will undoubtedly divert other supply to China,” said ESAI.
The study predicts the US and Canada emerging as key areas of growth in non-OPEC production.
The US will benefit from the growth in shale oil output, with the Bakken and other basins contributing to crude supply increase of more than 200,000 b/d. Canada’s oil sands will add at least another 300,000 b/d to non-OPEC production.
ESAI predicts that financial reforms and regulations will have “some limited impact” on open interest in the futures markets. It pinpoints the exemptions for non-commercials and swap dealers to dictate the magnitude of the impact of this new regulation on the global oil markets.