“There is a fear that second quarter could be peak earnings for the group this year,” said Cowen and Co analyst Jason Gabelman.
U.S. crude has rallied nearly 24% in the quarter, and while prices of transportation fuels tend to pick up in tandem, prices of other products like naphtha, asphalt and propane tend to lag the increase, squeezing margins.
The U.S. Energy Information Administration earlier this month forecast U.S. liquid fuels consumption in 2021 to rise by 1.5 million barrels per day from 2020. Gasoline product supplied rebounded in the second quarter to levels not seen since prior to the pandemic’s beginning.
That has analysts optimistic about coming reports, after the top three refiners lost $1.3 billion in the first quarter, according to Refinitiv IBES data. Valero reports its earnings on Thursday, followed by the other two next week.
Going forward, the spread of the highly transmissible COVID-19 Delta variant is threatening the nascent recovery in travel, with the United States saying this week that it will not lift any existing travel restrictions “at this point.”
Refining margins started to decline in June, falling to about $19.11 per barrel at the end of the month, compared with $20.42 at the end of the first quarter, Refinitiv Eikon data showed.
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