By OGJ editors
HOUSTON, May 15 -- Refinery construction oriented to gasoline in a market needing distillate is lifting the premium for light crude and contributing to market instability, says the Organization of Petroleum Exporting Countries.

In its May Monthly Oil Market Report, OPEC says global refinery construction during 2000-07 favored conversion capacity associated with gasoline while demand growth for the product was less than half that of distillate.

During this period, demand for distillate increased by 5.2 million b/d while that for gasoline rose by 2 million b/d and use of fuel oil declined.

At the same time, refiners added 1.2 million b/d of fluid catalytic cracking and coking capacity, associated with gasoline, but only 700,000 b/d of hydrocracking capacity, related to distillate.

Recently, demand for distillate has surged because of economic resilience in developing countries and the increased use of diesel generators, OPEC says. With insufficient distillate-oriented conversion capacity in place, refiners must rely on increased runs of light crude.