Refineries increased refining in June by 5%

Oil companies are increasing oil refining in the face of seasonal demand for fuel: in June, volumes rose by almost 5% to about 750 thousand tons per day. However, the exchange price of fuel, which is growing following the weakening of the ruble, was practically not affected. Growth of exchange prices has already resulted in losses at filling stations when selling gasoline, although retail prices are also gradually starting to increase.

Oil companies continue to increase oil supplies to refineries. So, oil refining in the Russian Federation in June increased by almost 5%, to about 750 thousand tons per day, relative to the average level in May, sources familiar with the statistics told Kommersant. The largest oil companies have almost completed the main preventive repairs at their refineries, the peak of repair work fell on May. It was assumed that in June due to the increase in the production of gasoline, fuel prices would begin to decline, however, the cost of AI-95 on the stock exchange updated its historical highs several times due to an increase in export netbacks against the backdrop of a weakening ruble. In addition, sales of fuel on the stock exchange in June were lower than a year ago, and the demand for gasoline against the backdrop of summer holidays at least did not fall in annual terms, which pushes fuel prices up.

The increase in export prices prompted oil companies to significantly increase shipments abroad in May, but in June, at the request of regulators, they decreased in average daily terms by 30% compared to May (see Kommersant of June 30). Nevertheless, the companies still failed to ensure the planned supply of fuel to the domestic market. On June 30, Deputy Prime Minister Oleksandr Novak announced the possibility of introducing fuel export quotas, but so far wholesale gasoline prices have hardly reacted to such prospects. So, this week the cost of AI-95 and AI-92 on the SPIMEX exchange increased by 0.5% and 0.9% – up to 64.9 thousand rubles. and 58.7 thousand rubles. per ton, respectively.

The increase in refinery utilization in June led to an increase in budget payments for the damper, which is compensation for oil companies for deliveries to the domestic market in a situation where fuel export is more profitable. The damper itself per ton of fuel also increased due to the depreciation of the ruble. Thus, payments from the budget for oil companies in June will increase by 45% compared to May, to 116 billion rubles, Reuters calculated.

A number of Kommersant’s interlocutors believe that the saturation of the market with gasoline may occur due to the reduction in oil exports by 500 thousand barrels per day announced by Russia on July 4 from August. However, some of Kommersant’s interlocutors fear that the resumption of repairs at the refinery in late August and September could once again aggravate the situation with fuel supply. The Ministry of Energy believes that the market is sufficiently provided with supply.

Continued growth in exchange prices for gasoline may lead to increased losses for gas stations in the retail sale of fuel, since gas stations do not raise their own prices at the same pace as their purchase prices. According to Petromarket, the net trading margin for AI-92 and AI-95 is minus 2 and 3 rubles per liter of fuel, respectively. As losses rise, gas stations will have to accelerate their price hikes. According to Rosstat, since the beginning of the year, gasoline prices at filling stations increased by an average of 2.6% by July 3, with a general inflation of 2.9%. Including over the past week, AI-92 gasoline has risen in price by 0.3%, to 48.46 rubles. per liter, AI-95 – by 0.17%, up to 63.26 rubles. per litre. Regulators are striving to keep the cost of fuel within the limits of inflation, which is still expected at the level of 5.3% by the end of the year.

In July, oil companies will significantly increase oil refining, as most of the largest refineries will operate at full capacity, but in August a number of plants will again go for repairs, says Mikhail Turukalov, an expert on the fuel market. He also notes that in order to ensure sufficient fuel supply, oil companies will have to increase stocks in July to prepare for the fall refinery maintenance campaign.

Dmitry Kozlov