Wood Mackenzie says the global oil product market could experience a surplus of gasoline supply as early as 2017 which, combined with a deficit of middle distillate and fuel oil, would put significant pressure on refiners by the end of the decade. According to Wood Mackenzie, this is in contrast to the current picture, with refiners benefitting from low oil prices, unplanned refinery outages and slower than expected ramp-up of new facilities which have helped keep oil product markets tight.
However, Wood Mackenzie cautions that oil demand growth will eventually slow in the long-term thanks to increasing efficiency and alternative fuel sources. By 2019 Wood Mackenzie expects margins to fall to the minimum sustainable level for some refiners and identifies key market indicators that could see gasoline cracks bottom out at low levels last seen in 2013.
According to Wood Mackenzie's latest long-term oil product market forecast, a surplus of gasoline is expected to flood the market as early as 2017 - in contrast with what's happening right now, where refiners are struggling to meet gasoline demand growth of approximately 420 thousand barrels per day (kb/d). Jonathan Leitch, a Research Director for oil product markets research at Wood Mackenzie explains: "Although gasoline cracks have been very strong this year, we could see a complete reversal in the market in just two years. The outlook for 2016 remains similar and in many ways stable, but in 2020 start we start to see a glut of gasoline supply developing – in excess of 30 million tonnes - which doesn't go away for a decade."