diesel

Local refineries post subdued 1Q results, higher fuel prices now dropping

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The current year did not begin favorably for the local petroleum sector, as indicated by first-quarter results posted by of the country’s two biggest refineries controlling the Greek fuel market.

Drastically reduced heating fuel sales were the main factor behind the disappointing first quarter results, compared to last year, despite an increase in demand for diesel and a modest rise in gasoline sales following an extended downward trajectory.

ELPE (Hellenic Petroleum), which announced its first-quarter results yesterday, reported a 13 percent fuel sales decline, overall, down to a level of 826,000 metric tons, despite operating a greater number of refueling stations, up to 1,749 in the first quarter from 1,737 a year earlier.

ELPE’s heating fuel sales fell by 22 percent in the first quarter, year on year, while diesel and gasoline sales rose by 6 and 2 percent, respectively.

The increased first-quarter sale figures for auto fuels, offering wider profit margins, helped the group’s EBITDA/metric ton margin improve slightly, by one percentage point.

Motor Oil Hellas, the Greek fuel market’s other major player, reported a 6.2 percent overall decline in auto and heating fuel sales.

Auto fuel sales at the group rose by 3.8 percent in the first quarter. Gasoline sales were up by over one percent while demand for diesel increased by 5.8 percent. However, the significant drop in heating fuel sales drove the group’s overall results lower.

Higher fuel prices in the first quarter have been attributed as a factor affecting sale levels in the sector. Prices at local pumps have just begun dropping as lower international prices begin to impact the Greek retail fuel market.

 

Major fuel demand decline in 2017, signs of life in January

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The prolonged bailout negotiations in the first half of 2017 not only impacted bond spreads and business loan interest rates but market sentiment, overall, which has affected fuel consumption levels, officials at Greek petroleum company Motor Oil Hellas noted yesterday while presenting the corporation’s results.

Despite the negative Greek market conditions, the refinery group posted record results as a result of its increased emphasis on exports to make up for lower demand in the domestic fuel market, which appears to be entering a new crisis period.

Overall demand for the corporation’s petroleum products in 2017 fell by 2.1 percent. Gasoline registered the biggest drop, falling 3.1 percent. Diesel demand increased by 0.5 percent while heating fuel, affected by poor activity in December, down by 30 percent compared to the equivalent month a year earlier, fell by over 2 percent, overall.

Latest fuel market data for January showed some signs of improvement for the auto fuel sector but the decline in heating fuel demand was sustained.

Gasoline demand rose by 11 percent in January, diesel demand rose by 23 percent, while heating fuel demand slumped 37 percent.

The significant decline in heating fuel registered for the winter gone by can be attributed to a particularly heavy winter a year earlier, which had boosted heating fuel demand to particularly elevated levels.

Returning to Motor Oil Hellas, overall fuel sales, in volume terms, achieved a new record level in 2017, reaching 13.7 million metric tons, up from 13.04 million metric tons in 2016. The refinery group’s exports exceeded the 10 million mark for the first time, reaching 10.2 million metric tons.

 

Poor December figures dampen fuel sector’s overall 2017 performance

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Subdued fuel demand figures registered in December, including sale level drops  for certain categories, impacted the sector’s overall performance for 2017, which ended slightly down compared to the previous year.

More specifically, in December, gasoline demand fell by a level of between 2 and 3 percent compared to the equivalent month a year earlier. Heating fuel demand fell sharply by 30 percent compared to December, 2016, primarily as a result of the milder winter experienced so far, combined with a preceding reinforcement of reserves. Also, emerging as the most surprising result of all, auto diesel demand fell by a considerable 10 percent.

Subsequently, the overall drop in sales for 2017 is estimated to be between 1 and 2 percent, primarily as a result of the steep drop in heating fuel sales.

These end-of-year results effectively mean that the fuel sector failed to register a solid rebound for yet another year.

Officials are concerned that a tax hike planned for diesel will further impact the sector.

 

Local diesel prices now EU’s 5th highest from 15th a year ago

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The price of auto diesel in Greece has climbed ten places over the past year, from fifteenth highest to fifth on the EU-28 list, an unprecendented leap for an EU member state, according to seasoned pundits.

A year ago, auto diesel prices in the Greek market were marginally higher than the EU average but are now five percent over the common market’s average of 1.243 euros per liter.

Auto diesel was priced at 1.186 euros per liter on December 19, 2016 and has now risen to 1.303 euros per liter, a 10 percent year-on-year increase.

The sharp price increase of the fuel, prompted by tax increases, has caught many diesel vehicle owners who have switched technologies by surprise.

Finland, the UK, Italy and Sweden occupy the EU’s top four places in terms of auto diesel prices.

Greece has also climbed higher on the EU list of gasoline and heating fuel prices over the past year. Last December, gasoline prices in Greece were the EU’s fourth highest and have since climbed a place to third. The price of heating fuel in Greece has risen from ninth to eighth place in the EU since last December.

The price of gasoline in Greece is currently at 1.534 euros per liter, 13 percent over the EU average of 1.359 euros per liter, according to latest European Commission data.

 

 

Diesel demand up, spurred by greater merchant ship activity

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Demand for diesel, used to run merchant ship engines, has increased, spurred by international trade growth during the first half of 2017 to reach the highest level recorded over the past six years.

International trade grew by 5 percent between March and May this year, compared to the equivalent period a year earlier, according to data provided by the Netherlands Bureau for Economic Policy Analysis (CPB).

This rise in international trading activity covers most of the world’s regions, not including Africa and the Middle East, the CPB data showed.

More stable fuel prices this year have contributed to the growth in global trading activity. Sliding consumer spending and lower business investment levels experienced between mid-2014 and early 2016 in most developing countries have now rebounded.

Taking into consideration the increase of global trading activity, most analysts agree that fuel demand will continue to increase in 2017 and 2018. Pundits believe that demand for diesel will grow at a faster rate than that of gasoline.

Global demand for refined petroleum products dropped by 0.5 percent in 2016, the first decline registered since 2009.