Refining margins in Asia expected to stay at $5.0-$5.5 per barrel through 2017

Refining margins in Asia, is expected to stay at $5.0-$5.5 per barrel through 2017, says Moody's in its latest edition of Asia Oil and Gas Quarterly.

Moody's Investors Service has released its latest edition of Asia Oil and Gas Quarterly, a quarterly publication that examines the major credit trends in the oil and gas industry across Asia, through recently published Moody's reports.

"We expect that refining margins will show volatility in 2017, driven by bloated supply and the lagged effect of crude-price fluctuations on petroleum-product prices," says Rachel Chua, a Moody's Analyst.

Moody's believes that low profitability levels will force small-scale, low-complexity refiners with higher costs of production to reduce output.

Moody's newsletter also says that firmer oil prices in 2017 and continued cost reductions will support the earnings of Asian integrated and upstream players. At the same time, capital spending levels should rise, and upstream acquisitions in 2017 should increase, based on the growth ambitions of Asian players.

Moody's says that given the prolonged oversupply of oil globally, compounded by very high inventory levels, a rebalancing of the oil markets will likely occur in late 2017 at the earliest.

Powered by Capital Market - Live News