U.S. refiners seek strategies to adapt to lower demand - S&P Global

Nov. 12, 2020 6:41 PM ETMarathon Petroleum Corporation (MPC), VLO, PSX, PBF, DINO, CVI, DK, CRAKVLO, DK, CVI, MPC, DINO, PSX, PBF, CRAKBy: Carl Surran, SA News Editor42 Comments
  • Nearly 10% of U.S. refining capacity is offline due to low demand, plant repurposing or extended turnarounds, and many companies believe it is still not enough to support refining margins, S&P Global Platts reports.
  • According to the report, 1.69M bbl/day of refinery capacity is offline now or will be soon as refiners cope with weak gasoline, diesel and jet demand compounded by the second wave of the pandemic.
  • The two largest U.S. refiners say they plan to run their refineries at lower rates in Q4 than in Q3: Marathon Petroleum (NYSE:MPC) plans to run 2.265M bbl/day of crude in its refineries during Q4, compared with 2.39M bbl/day it processed in Q3, while Valero Energy (NYSE:VLO) expects to process 2.48M bbl/day vs. 2.526M in Q3.
  • Phillips 66 (NYSE:PSX) recently said global refinery closures have reached nearly 2M bbl/day, with another 700K bbl/day of temporary closures plus another 700K from refineries that have talked about potential of converting into terminals or other activities.
  • PBF Energy (NYSE:PBF) says another 1M-1.5M bbl/day more in refinery closures are needed in the U.S. to return to optimum.
  • Things could get worse before they get better, as the recent surge in COVID-19 cases in the U.S. likely will trigger more lockdowns, countering any tightening inventories of gasoline and diesel and the Pfizer-induced optimism around a coronavirus vaccine which helped oil prices.
  • With lockdowns in the headlines today, refining names plunged across the board: MPC -6.7%, VLO -5%, PSX -6.9%, HFC -2.9%, PBF -5.2%, CVI -4.5%, DK -2.6%.
  • ETF: CRAK

Recommended For You

Comments (42)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.