Trends, Cycles, and Kinks

Future Atlantic Basin Balances & Implied Trade

•Distillate Shortfall

–Europe needs more

–U.S. may help fill that need

–Eastern Europe, Middle East, and India will be important suppliers to Europe

•Gasoline Glut

–Europe’s surplus production expected to grow

–Europe’s exports will compete with

›India, Middle East to supply Asia and Africa

›U.S. Gulf Coast, Virgin Islands to supply Latin America

›U.S. Gulf Coast, Canada, Virgin Islands to supply U.S. East Coast

–But Europe’s best market may still be the U.S. – implying strong competition in East Coast markets.

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	SEven with flat to slightly declining European transportation product demand, the demand for diesel is projected to increase, while gasoline demand declines. Additional refinery upgrades to produce more distillate are not expected to keep up with demand growth. As a result, more imports will be needed, albeit at a lower rate of increase than in the past decade.

	SThe recession’s impact on transportation fuels was less in Europe than in the U.S. As the economy recovers, diesel demand will grow again.

	SU.S. refiners have demonstrated they can increase distillate production, and can be an important source of European imports. India and the Middle East, both with expanding capacity, are also targeting Europe. All of this may make it less likely Europe will see the supply situation as tight as it was in 2008.

	SThe second bullet summarizes the point made in the last slide.