(Reuters) – US oil refiners are expected to have the second-quarter worst results in a decade in the coming days, with increased production demand, while epidemic closures halted summer travel.
File photo: A Valero Energy Corp. Gas station El Cajon, California, US, shown on August 8, 2017. REUTERS / Mike Blake / File Photo
Fuel consumption has declined, with the latest US data showing a 25% drop on auto travel from a year ago and a 75% drop in passengers at airports. Refiners derive the bulk of their profits from domestic fuel sales, for travel in the June quarter.
Seven top independent refiners, including Valero Energy Corp (VLO.N), Philips 66 (PSX.N), PBF Energy Inc. (PBF.N) And Marathon Petroleum Corp ()MPC.N), Is expected to be a deficit.
On Thursday, Valero is expected to report a loss per share of $ 1.41, according to Refinitiv’s IBES data, compared to a gain of $ 1.51 a year earlier. According to Refinitive, the group’s average per-share loss per year would be $ 1.05, compared to a $ 1.65 gain a year earlier.
According to the US Energy Information Administration, the refinery crude processing rate is approximately 2.8 million bpd or 17% below the seasonal average over the past five years. Higher inventions also hurt profits, as refiners increased in anticipation of business reintegration.
According to Credit Suisse, retail networked refiners could gain from the sales of tobacco and beer, which lasted this quarter and could decline year-on-year.
“Refiners benefited as consumers who could shop in larger, more crowded stores such as Walmart (WMT.N) Shifted spending to smaller refiner retail locations, ”said Matthew Blair, refining analyst at Tudor, Pickering, Holt & Company.
West Coast WES
Companies with a heavy West Coast presence faced trouble due to California’s second lockdown, in which tech companies such as Facebook and Google work from home.
“West Coast refining margins will be extremely weak due to a hit in driving demand … California was one of the first states to enter lockdown and has hit again,” Blair said.
Credit Suisse said the Marathon’s Martinez, Calif., Refinery remains idle and at least one of PBF Energy’s two California plants can be deactivated to minimize damage.
“We do not see gasoline demand to correct pre-epidemic levels in California,” Credit Suisse refining analyst Manav Gupta said in a note.
Reporting by Laura Sanicola; Editing by David Gregorio