Moody's: New Chinese plants could slow global refining earnings

|By:, SA News Editor

Cheap natural gas and oil supplies will give U.S. Gulf coast refiners an edge in global markets, but earnings could be dampened by new plants coming online in China and the Middle East that could outpace worldwide demand for refined products like gasoline, according to Moody's.

While refiners such as Phillips 66 (PSX), Marathon Petroleum (MPC) and Valero (VLO) stand to gain from a growing bulge in oil supplies on the Gulf coast, Chinese refiners are scheduled to bring more than 1.2M bbl/day of capacity, and Middle Eastern refiners could add another 1M bbl/day, to market through next year.

Moody’s says it expects global demand for refined products to grow by 1.2M bbl/day this year and for earnings to increase 8% by next year, though slowing economic growth in China could tilt the results downward.