November 6, 2009 at 7:45 am #2896
U.S. independent oil refiners can’t wait for next year and its potential to bring about a rebound in fuel margins.
In the past 10 days, five refiners, including the largest, Valero Energy Corp. (VLO), have posted quarterly losses, marking back-to-back dismal quarters for a sector struggling through a recessionary drag on demand for gasoline and diesel. Many executive and analysts have predicted that next quarter won’t fare any better. All hope lies in 2010.
“Looking forward we don’t expect refining fundamentals to rebound quickly,” Michael Jennings, president and chief executive of Frontier Oil Corp. (FTO) said Thursday during an earnings call. Margins won’t improve until “well into 2010,” Jennings said.
Frontier, joined Alon USA (ALJ), Delek (DK), CVI Energy (CVI) in reporting multimillion dollar losses.
Delek Chief Executive Ezra Uzi Yemin told investors Thursday afternoon, “If we are not at the bottom, we are somewhere around the bottom.”
Like last quarter, Holly Corp. (HOC) stood apart by posting positive results thanks to the niche geographical locations of its plants.
In order to stay afloat, refiners have been shutting down units while they wait for cars and trucks to get back on the road. Sunoco Inc. (SUN), which reports earnings late Thursday, has permanently idled one of its East Coast plants.
Among the sector’s problems is the fact that companies have spent considerable sums of money over the last several years to upgrade their plants to process heavy or sour crude. Those blends have typically traded at a steep discount to the light and sweet blends but that discount has narrowed because oil producers have cut back drilling for it. The discount is likely to widen following an economic recovery.
Complete story at http://www.downstreamtoday.com/news/article.aspx?a_id=19124
by Susan Daker & Naureen S. Malik
Houston Dow Jones Newswires
November 05, 2009
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