Changes on the fuel market in 2021

Crude oil and gas prices

In 2021, the average price of Brent crude was USD 70.9/bbl., having increased by 69.4% on 2020. The main factor behind the price increase was the growing demand for crude oil, which, according to OPEC, was approximately 6% in 2021, and was mainly attributable to the recovery of economies after the lockdown period in 2020 and, consequently, to an estimated global GDP growth of nearly 6%. Since the lifting of restrictions in May, demand in the US, Europe, China and India has grown steadily. In 2021, the demand for crude among the top three consumers (the US, China, Europe) increased the most in the US (by 8.4% year on year).

70.9 USD/bbl

average price of Brent crude in 2021

The active policy of OPEC+ countries to monitor the supply-demand situation in the market on an ongoing basis was significant for market balancing. In July, the member countries agreed to increase their output by 400,000 b/d every month from August to December.

Also of significance is the fact that since September last year, the profitability of using oil relative to other inputs for power generation has increased as a result of high prices of natural gas and high levels of global inflation, which prompts investors to increase investments in energy commodities.

In 2021, the average Urals/Brent crude differential was USD -1.83/bbl, compared with USD -0.6/bbl in 2020. The price of the Rebco blend was rising at a slower pace than the price of Brent, due, among other things, to growing supplies from Russia, as the OPEC + policy loosened. An increase in loading programmes at Russian export ports was observed as of February. In October, the loading programme reached its highest level since the beginning of the pandemic, at 7.41 million tons, with the autumn maintenance shutdown in Russia contributing to the peak. The demand for Urals crude was affected on the one hand by the high interest in sweet crude grades in the third quarter (rising costs of hydrogen production due to high prices of natural gas), and then rising crack spreads for medium fractions turned the market’s attention towards medium and high acidity crudes

Source: In-house analysis based on Refinitiv data


In 2021, natural gas prices were very volatile. They increased significantly year on year (at the UK National Balancing Point, the average price during the year grew by approximately 390%, to 88.1 USD/boe), a result of several factors:

  • increased demand for the commodity (economic recovery);
  • low level of filling of storage facilities in Europe (inventories at the beginning of October 2021, i.e. start of the heating season, were 18.1% lower year on year);
  • market speculation;
  • reduced supplies by Russia (at least 5.5% less than in 2020), which took steps towards certification of the Nord Stream 2 pipeline, despite the country’s record-high gas output (514.8 bcm in 2021, i.e., 62.2 bcm more than in 2020);
  • lower production of natural gas in Norway and the United Kingdom (effect of maintenance shutdowns on gas fields);
  • lower LNG supplies to Europe (10% less than in 2020 as the Asia-Pacific market was favoured).

Throughout 2021, the gas market in Europe was under price pressures and the limited availability of the commodity lack (a result of steps taken by Russia, which led to a low level of filling of OAO Gazprom's storage facilities in Austria, Germany and the Netherlands). This situation improved slightly towards the end of 2021, but the price pressures subsided only temporarily as a result of increased LNG supplies to Europe from the US. Those difficulties in the availability of natural gas resulted in market’s greater sensitivity to one-off factors (e.g., reduced generation of electricity by onshore wind farms, temporary problems at nuclear power plants).


Source: In-house analysis based on Refinitiv data

Global prices of crude oil are usually denominated in US dollars. Therefore, from the perspective of refining companies, crude prices are as important as the exchange rates of their local currencies against USD. In 2021, the Polish currency appreciated slightly against the US dollar, i.e. the average USD/PLN exchange rate fell by 0.9%, from PLN 3.8978 in 2020 to PLN 3.8647 in 2021. However, since November 2021 the exchange rate has stayed at levels above 4 USD/PLN.

Source: In-house analysis based on National Bank of Poland data.

In addition, oil and gas prices may be affected by factors such as a decline in demand (reflecting an economic downturn), geopolitical uncertainties and armed conflicts in oil extraction areas, import and export restrictions, weather conditions and natural disasters.

Crude oil throughput


A recovery in the utilisation of global refining capacities was seen in 2021.

At year end, an 11.2 p.p. year-on-year increase to 83.0% was reported by European countries, and in the U.S. the utilisation increased by 10.7 p.p. year-on-year, to 89.8%.

The smallest increase was recorded in Asia, where in December 2021 the utilisation of local refineries’ capacities was 2 p.p. higher year on year. In addition, refineries are becoming increasingly complex, with greater secondary processing capacities.

This long-term trend has been caused by the combination of older, simpler refineries being closed down, existing plants being extended through the addition of secondary processing capacities, and building of new, highly complex plants. This is due to growing global demand for light and ‘clean’ products, coupled with a gradual decline in demand for residual fuel oil. Moreover, these changes result from increasingly stricter fuel quality legislation.

Since 2012, many refineries, with a total capacity of about 2 million b/d, have been closed down across Europe. There are more than 100 refining plants in Europe with different conversion levels, but the profitability of some of them (taking into account the prevailing market conditions) is low, and as a result some plants have been or will be closed. A characteristic trend in the prevailing conditions is also the conversion of plants into biorefineries.

With plans to achieve zero-carbon economies accelerating, the projected decline in fuel demand, the growing importance of environmental issues and the use of other energy sources, it is likely that global refining capacities will decline and more plants will be shut down.

Source: In-house analysis based on OPEC data.

China was one of the few countries which increased throughput in 2021 relative to 2019. The country strengthened its position in the global refining market by launching more high-conversion capacities, thus putting pressure on traditional refinery operations in developed countries. Moreover, as shown by the IMF data, the country has been much less economically affected by the COVID-19 pandemic compared with most countries in the world, with GDP growth of 2.3% in 2020 and 8% in 2021 (the global average rates were -3.1% and 5.9%, respectively).

In 2021, the volume of oil processed in Poland was 24.8 million tonnes, i.e., 3.9% less year on year.

In-house analysis based on Polish Organisation of Oil Industry and Trade (POPiHN) data.

Product margins

In 2021, crack spreads, i.e., differences between the product prices and the reference price of crude oil, were as follows:

lowest USD 65.1 per tonne, highest USD 225.5 per tonne, with average prices having increased 113.3% year on year, or USD 73.9 per tonne. The gasoline spreads were affected by lower feedstock throughput at refineries in the spring; strong seasonal growth in demand in Europe and the US; high levels of fuel exports from Europe to Africa, the US and the Mediterranean. In late August, Hurricane Ida hit the Gulf of Mexico, temporarily halting refinery throughput there and further increasing interest in European products. In November, margins were affected by concerns about product demand as a result of the emergence of Omikron, a new mutation of the virus. However, these developments have not had seriously affected the demand, according to market observers;

lowest USD 24.9 per tonne, highest USD 130.9 per tonne, with average prices having increased 65.1%, or USD 27.2 per tonne year on year. The key driver in 2021 was the recovery of transatlantic traffic following the lifting of restrictions for vaccinated passengers arriving in the US;

lowest USD 15.9 per tonne, highest USD 101.6 per tonne, with average prices having decreased 10.7%, or USD 6 per tonne year on year. In the first quarter of 2021, crack spreads were affected by the prolonged European travel restrictions and relatively large imports (in March from Russia and in April mainly from the Middle East). From April, the crack spread was recovering as a result of the lifting of travel restrictions, satisfactory rate of recovery of the global economy, and declining exports from Russia and the US (due to high diesel prices in the US, the unusual opposite direction of arbitrage was periodically observed). In October, the supply of middle distillates was reduced due to high costs of hydrogen production (record-high prices of natural gas). At least three European refineries reduced the load on or completely shut off their hydrocrackers. By the end of the year, there were signs that the market was recovering to pre-pandemic levels. Fuel stocks in the EU15 + Norway in November were the lowest since 2019, according to Euroilstock. In the US, the demand for diesel oils in December was 6% higher than before the pandemic;

lowest USD -154.36 per tonne, highest USD 96 per tonne, with average prices having decreased by 60.7%, or USD 58.1 per tonne, year on year. The margins were affected by the low consumption of the product for sea transport and electricity generation, particularly observed until April. As a result, stocks in Singapore and Fujairah recorded high levels in the first half of the year. A decline in stocks at both of these ports were observed from June. Already in August, stocks in Fujairah fell below the pre-pandemic level, mainly as a result of rising prices of natural gas and the growing interest in heavy fractions as an alternative energy carrier. However, there are still high stocks in Singapore (in October they increased by 7.4% month on month) and, after maintenance shutdowns in Russia concluded in November, supplies from Russia are also expected to rise

Source: In-house analysis based on Refinitiv data

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