Latest news with #refiners
Yahoo
13 hours ago
- Business
- Yahoo
US refiners may see Q2 profit recover on stronger diesel margins
By Nicole Jao NEW YORK (Reuters) -Investors are expecting top U.S. refiners to report higher second-quarter profits, bouncing back from losses during the first three months of the year as unseasonably strong diesel margins boost earnings. Fuelmakers have reaped unexpected profits from producing key products in recent months, a respite after earnings slipped from record levels in 2022, when a recovery in demand following the COVID-19 pandemic and Russia's invasion of Ukraine lifted prices. Some forecasting groups had anticipated weaker margins this year as demand was expected to slow. While analysts expect a recovery from the previous quarter, profits are likely to be weaker than a year ago. "Refiners are up 20% year-to-date, with surprising counter-seasonal diesel crack strength supporting the group," said TD Cowen analyst Jason Gabelman. Product margins could potentially hold at elevated levels until autumn maintenance, Gabelman said. Diesel cracks averaged $17 per barrel during the second quarter, in line with the first quarter, but ended the three-month period higher at $21 per barrel, TPH & Co analyst Matthew Blair said in a note. U.S. distillate inventories reached five-year lows in early May thanks to strong exports and improving demand, which supported margins, Blair said. U.S. refinery distillate yields have also been low, likely due to a lighter crude slate. Valero, the second-largest U.S. refiner by capacity, is set to kick off refiner earnings on Thursday, with analysts forecasting a profit of $1.75 per share, down from $2.71 per share profit a year ago, according to data from LSEG. Marathon Petroleum, the top U.S. refiner by volume, is expected to report a per-share profit of $3.28, compared with a $4.12 per share profit a year ago, LSEG estimated. Phillips 66 is expected to report a profit of $1.69 per share, versus $2.31 per share profit a year ago, according to LSEG estimates. Both Marathon and Phillips 66 reported losses in the first quarter.
Reuters
13 hours ago
- Business
- Reuters
US refiners may see Q2 profit recover on stronger diesel margins
NEW YORK, July 23 (Reuters) - Investors are expecting top U.S. refiners to report higher second-quarter profits, bouncing back from losses during the first three months of the year as unseasonably strong diesel margins boost earnings. Fuelmakers have reaped unexpected profits from producing key products in recent months, a respite after earnings slipped from record levels in 2022, when a recovery in demand following the COVID-19 pandemic and Russia's invasion of Ukraine lifted prices. Some forecasting groups had anticipated weaker margins this year as demand was expected to slow. While analysts expect a recovery from the previous quarter, profits are likely to be weaker than a year ago. "Refiners are up 20% year-to-date, with surprising counter-seasonal diesel crack strength supporting the group," said TD Cowen analyst Jason Gabelman. Product margins could potentially hold at elevated levels until autumn maintenance, Gabelman said. Diesel cracks averaged $17 per barrel during the second quarter, in line with the first quarter, but ended the three-month period higher at $21 per barrel, TPH & Co analyst Matthew Blair said in a note. U.S. distillate inventories reached five-year lows in early May thanks to strong exports and improving demand, which supported margins, Blair said. U.S. refinery distillate yields have also been low, likely due to a lighter crude slate. Valero (VLO.N), opens new tab, the second-largest U.S. refiner by capacity, is set to kick off refiner earnings on Thursday, with analysts forecasting a profit of $1.75 per share, down from $2.71 per share profit a year ago, according to data from LSEG. Marathon Petroleum (MPC.N), opens new tab, the top U.S. refiner by volume, is expected to report a per-share profit of $3.28, compared with a $4.12 per share profit a year ago, LSEG estimated. Phillips 66 (PSX.N), opens new tab is expected to report a profit of $1.69 per share, versus $2.31 per share profit a year ago, according to LSEG estimates. Both Marathon and Phillips 66 reported losses in the first quarter.
Bloomberg
5 days ago
- Business
- Bloomberg
Energy sector wades into uncertain waters as demand ebbs
This article was written by Bloomberg Intelligence Senior Industry Analyst Vincent G Piazza and Associate Analyst Matthew Demarino. It appeared first on the Bloomberg Terminal. Refiners and integrateds appear the best positioned heading into the peak of 2Q earnings season amid a clouded near-term backdrop for oil and gas prices. Positive structural trends could be suppressed by geopolitical risks as demand concerns dilute benchmarks. The global economy's path remains uncertain, and the OPEC+ grip on production could tighten as quotas boost volume above expectations. Metrics change with economic, political landscape Our energy-sector metrics remain fairly divided, with upstream, the sector's second-heaviest S&P 500 weighting, likely reporting more mixed profitability in 2Q. Improvement is probable this coming winter as gas balances look tighter due to higher seasonal demand and lower storage volume. Geopolitical risk premiums are eroding, which may limit activity in the broader sector. M&A remains key to sentiment, yet most consolidation appears on hiatus until tariffs are more concrete. Integrateds' diversified base offers multiple levers of protection, while refiners may have benefited from cheaper inputs during the driving season. Capped production follows potential oversupply, and upstream operators have shifted to more cost-effective strategies to preserve shareholder returns. Premium accorded to downstream, midstream Midstream, along with refining and integrateds, have higher forward P/E multiples, while equipment and services, and upstream (E&P) are the cheapest vs. peers. Yet sector-wide sentiment remains unstable, with energy fundamentals clouded by oil uncertainty, the economic backdrop and softer benchmark prices across US hubs. At 20.5x, midstream has the highest premium to the S&P 500 energy sector, thanks to greater earnings visibility from long-cycle contracts. Improved balance sheets, throughput increases and M&A could support midstream companies despite limited organic growth opportunities and a challenging regulatory backdrop. Refining (16.9x forward P/E) trades at a premium to the sector, but downstream product demand is a concern amid a heightened awareness of recession trends.
Zawya
6 days ago
- Business
- Zawya
Kazakhstan CPC Blend oil heads to Asia as European demand eases, sources say
SINGAPORE - Asian refiners are buying more Kazakhstan CPC Blend crude loading in August than July after falling European demand depressed prices, traders said, likely capping Asia demand for similar light-sour grades such as Abu Dhabi's Murban. Softening demand from refiners in the Mediterranean for CPC Blend crude loading in the second-half of August widened discounts for the crude by about $1 a barrel from the previous month, a London-based trader said, creating opportunity for traders to cash in on the difference. Prices for CPC crude for delivery to North Asia are about $3.50 to just below $4 a barrel above September Dubai quotes, the sources said. This is below the cost for Murban at roughly $4.70 a barrel to Dubai quotes on a cost and freight basis (C&F), they added. Murban, which flows mostly to Asia, is supported by lower exports as Abu Dhabi National Oil Co is diverting supplies to its domestic refinery. Unipec, the trading arm of Asia's largest refiner Sinopec , South Korea's top two refiners SK Energy and GS Energy, and India's Reliance Industries have bought at least 1 million barrels of CPC Blend crude each, the sources said. The companies did not immediately respond to requests for comment. A narrowing of Brent's premium to Middle East benchmark Dubai has also made Atlantic Basin grades more affordable for Asian buyers. The Brent-Dubai Exchange of Futures for Swaps fell below $1.60 a barrel this week, on Thursday's close, levels not seen since May, LSEG data showed. June Goh, a senior analyst at Sparta Commodities, said an uptick in freight rates for Very Large Crude Carriers on the Middle East to China route has also increased costs for Gulf crudes versus arbitrage supplies from Kazakhstan, the U.S. and Brazil. "We anticipate further correction of the spot AG (Arabian Gulf) market is required to stave off competition of the arb crudes," she added. Meanwhile, traders are also seeking opportunities to ship U.S. West Texas Intermediate crude to Asia after premiums for WTI at East Houston , also known as MEH, fell to their lowest in more than two weeks. Offers for WTI crude deliveries to North Asia are about $5 a barrel above September Dubai quotes, slightly higher than Murban, traders said. (Reporting by Florence Tan and Siyi Liu in Singapore, Arathy Somasekhar in Houston; Editing by Sharon Singleton)
Reuters
6 days ago
- Business
- Reuters
Kazakhstan CPC Blend oil heads to Asia as European demand eases, sources say
SINGAPORE, July 18 (Reuters) - Asian refiners are buying more Kazakhstan CPC Blend crude loading in August than July after falling European demand depressed prices, traders said, likely capping Asia demand for similar light-sour grades such as Abu Dhabi's Murban. Softening demand from refiners in the Mediterranean for CPC Blend crude loading in the second-half of August widened discounts for the crude by about $1 a barrel from the previous month, a London-based trader said, creating opportunity for traders to cash in on the difference. Prices for CPC crude for delivery to North Asia are about $3.50 to just below $4 a barrel above September Dubai quotes, the sources said. This is below the cost for Murban at roughly $4.70 a barrel to Dubai quotes on a cost and freight basis (C&F), they added. Murban, which flows mostly to Asia, is supported by lower exports as Abu Dhabi National Oil Co is diverting supplies to its domestic refinery. Unipec, the trading arm of Asia's largest refiner Sinopec ( opens new tab, South Korea's top two refiners SK Energy and GS Energy, and India's Reliance Industries ( opens new tab have bought at least 1 million barrels of CPC Blend crude each, the sources said. The companies did not immediately respond to requests for comment. A narrowing of Brent's premium to Middle East benchmark Dubai has also made Atlantic Basin grades more affordable for Asian buyers. The Brent-Dubai Exchange of Futures for Swaps fell below $1.60 a barrel this week, on Thursday's close, levels not seen since May, LSEG data showed. June Goh, a senior analyst at Sparta Commodities, said an uptick in freight rates for Very Large Crude Carriers on the Middle East to China route has also increased costs for Gulf crudes versus arbitrage supplies from Kazakhstan, the U.S. and Brazil. "We anticipate further correction of the spot AG (Arabian Gulf) market is required to stave off competition of the arb crudes," she added. Meanwhile, traders are also seeking opportunities to ship U.S. West Texas Intermediate crude to Asia after premiums for WTI at East Houston , also known as MEH, fell to their lowest in more than two weeks. Offers for WTI crude deliveries to North Asia are about $5 a barrel above September Dubai quotes, slightly higher than Murban, traders said.
