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European refineries face difficult times
European refining has been in the doldrums for the last few years. Alex Davis looks at the outlook for Europe’s refiners and at how this will affect hedging strategies
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European refining has taken a sustained beating since the onset of the financial crisis two years ago, caught between consistently steep oil prices and a long-term decline in European oil product demand.
In particular, Europe’s refining margin rates came under enormous pressure last year. BP reported its gross margin for northwest Europe at $3.26/bbl in 2009, a drop of more than 50% from $6.72/bbl in 2008. Shell, the largest European major, reported a starker drop from $5.25/bbl to $1.80/bbl on
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