Worldwide gasoline glut seen by 2010: WoodMac

HOUSTON (Reuters) - Fuels coming from outside the traditional oil-based supply chain will lead to a worldwide gasoline oversupply by 2010, and that will lower prices, a consulting firm predicted on Tuesday.

"The growth in total supply is far beyond that required for demand growth," said Aileen Jamieson, downstream research manager for Wood Mackenzie in a report entitled "Global Refining in 2010 - Out of Balance."

Wood Mackenzie forecasts an additional 8.1 million barrels per day of crude refining capacity by 2010. The firm also sees about 1.8 million barrels per day more fuel from non-refinery sources, such as biofuels and natural gas liquids.

With estimates of demand increasing around 9 million barrels per day in the same period, Wood Mackenzie foresees a surplus of about 1 million barrels daily in 2010, Jamieson's report said. As a result, prices will drop, she predicted.

Effects will vary by region, with the least impact in North America where gasoline is expected to remain in deficit, and the most in the Middle East and Asia Pacific where refinery capacity is expected to grow the most, she wrote.

In any event, the imbalance will be corrected by the market, the report said.

"A global oversupply of gasoline is expected to reduce prices, which may increase demand and promote overall refinery supply optimization, both of which redress the imbalance," the report said.

"In the case of fuel oil, a growing shortage is likely to push up prices. Where fuel switching is possible, e.g., in some power generation, we would expect the industry to turn to alternative feedstocks, thus destroying some fuel oil demand and returning the fuel oil balance to today's position," Jamieson wrote.

The world currently consumes about 21.5 million barrels of gasoline and 13.5 million barrels of diesel for transportation, with roughly 13 million barrels more of diesel used as heating oil, Wood Mackenzie said.