Refining Outlook Shaped by Regulation And Economic Growth -- RBN Energy -- March 2, 2016

Active rigs:

	3/2/2016	03/02/2015	03/02/2014	03/02/2013	03/02/2012
Active Rigs	35	120	192	184	205

RBN Energy: Refining Outlook Shaped by Regulation And Economic Growth.

The U.S. refining industry appears to be transitioning from an era of high margins and record throughputs. Falling crude prices at first increased refining margins – especially as demand for cheap refined products like gasoline expanded. Now product inventories are brimming and margins are squeezed. As we explain today the industry can look forward to an extended period of low crude prices while regulatory requirements and the pace of economic growth largely drive refined product trends.

We have previously covered Turner, Mason & Company’s analysis of the world refining market. Most recently in December 2015 we reviewed their analysis of global crude supply and demand over the next 10 years to 2025 - a detailed assessment of future sources of crude supply and refinery demand (see A New World Order). Turner, Mason has a deep understanding of refining and refining technology worldwide as well as the impact of changes in crude feedstock bought about by the U.S. shale revolution (see Here Comes The Reckoning Day). The company also produces a biannual review of industry fundamentals and key drivers – the latest version of which is titled “The 2016 Crude and Refined Products Outlook” (February 2016). The 160 page report covers a range of key topics for the refining industry including the current low crude price environment, refined product trends, regulatory issues impacting refiners and anticipated changes in infrastructure. The report contains an updated price and petroleum demand forecast from 2016 through 2030 that incorporates the impacts of crude production breakeven costs, price elasticity for petroleum demand and effects of regulatory initiatives and geopolitical events. The outlook starts where everyone is focused these days – with crude prices and supply/demand. We’ll provide a glimpse of Turner, Mason’s view on that topic first and then hone in on a couple of important trends that the report highlights in the refined product markets – impacting gasoline and diesel.