U.S. independent refiners are expected to roll out lower than expected first-quarter profits after a spate of outages, weak gasoline margins and a surge in the price of Canadian oil, according to analysts.
Major independent refiners cut production dramatically during the quarter, with some electing to undergo maintenance rather than produce barrels at a time when gasoline margins slumped.
Several major U.S. refiners, including Valero Energy Corp, HollyFrontier Corp, and Marathon Petroleum Corp, are all expected to fall short of consensus estimates when they report results, according to Refinitiv Eikon’s SmartEstimate model, which values more recent revisions from higher-ranked analysts.
However, reduced refining output in the early part of the year sets up the industry for a potential rebound as the critical summer months approach. With gasoline stockpiles at a four-year low on a seasonal basis, margins have rebounded in anticipation of driving season.
U.S. refinery utilization dropped to 87.5 percent in early April, the lowest seasonally since 2014. Refiners had been running full-tilt for much of 2018, encouraged by strong demand for distillates. But in the process, they overproduced gasoline, tanking margins for the fuel along the way.