South Korean refiners will slightly lift overall April crude processing rates on margin recovery but they are limiting the volume as they prepare for the peak summer gasoline season, a Reuters survey showed on Tuesday.
South Korean refiners will raise runs by 20,000 barrels per day (bpd) overall, with the largest refiner SK Corp lifting its run by 30,000 bpd to 750,000 bpd in April. This will be offset by a cut by smaller refiner SK Incheon.
Summer sees the highest gasoline demand, and oil prices have been on an upward spiral since early this month, after oil data for the United States showed low inventory level for gasoline. US light crude for May delivery is being sold at around $65 a barrel, while industry sources predict prices will reach near $70 ahead of the summer season.
"Margins have been improving, so refiners are lifting or maintaining volumes, but at the same time, they have to keep inventory levels at a certain point before summer comes," said an industry source. Stock levels at the end of February, according to a data released by South Korea's Korea National Oil Corp were at 70.51 million barrels, down 1.4 percent from the previous month. The refiners imported less crude since early this year to level out high inventory levels in December.
Second-largest refiner GS Caltex, third-largest S-Oil Corp and fourth-largest Hyundai Oilbank Corp will leave their processing rates unchanged from March while the smallest SK Incheon Oil Corp plans to cut the rate by 10,000 bpd to 160,000 bpd in April.