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The International Energy Agency said in its monthly oil market report that further declines in refinery profitability have dragged down the outlook for refining in the coming months.
The agency said refineries (especially refineries in Europe) have reduced production for poor cash flow conditions to tighten supply in the face of weak demand and improve oversupply.
The International Energy Agency said that unless the market can consume floating stocks and drive profit margins, production may not increase.
The agency said that in the fourth quarter global refinery crude oil processing volume is expected to reach 73.2 million barrels / day. The forecast is lowered by 200,000 barrels/day from last month.
The IEA expects that China, India and Russia will not reduce the amount of crude oil processed by refineries. The refining capacity of these countries will be started by the construction of a new refinery in China, the production of Jamnagar refinery at Reliance Industries Ltd., and Russia’s tax incentives for refined oil exports.
The International Energy Agency said on Friday that the continued weakness in refinery profitability will limit the global refinery volume in the fourth quarter.