Barclays on U.S. Independent Refiners: Dept of Energy Inventory Analysis
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Rating Summary:
13 Buy, 11 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 19 | New: 22
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Barclays on U.S. Independent Refiners: PC Weekly DOE Inventory Analysis
Yesterday, the Dept of Energy (DOE), reported crude oil inventories fell 191,000 barrels last week, gasoline fell 1.72 million, and distallate fell 63,000.
Analyst, Paul Y. Cheng, labeled the DOE report as positive for light product. He said, "Although the near-term U.S. and global demand outlook are less than inspiring, the core product crack outlook has been improving over the last six months due to the recent wave of refinery shut-down announcements. Following the Petroplus bankruptcy on top of announced and potential closures in the Atlantic Basin by Valero (NYSE: VLO), Hess (NYSE: HES), ConocoPhillips (NYSE: COP), Sunoco (NYSE: SUN), and the possible shutdown of Tesoro's (NYSE: TSO) Hawaii as well as Murphy's (NYSE: MUR) Milford Haven refineries, we estimate that total refining shutdowns could reach 2.4 million b/d in 2012 under the most extreme scenario compared to our estimate of new build additions of 2.3 million b/d, or a slight net capacity reduction."
In conclusion, Cheng said, "Our current base case, however, assumes that about 1.5 million b/d of the refining capacity will actually be shut. Although it will not support a cyclical upturn, it should be supportive of 2012 core product cracks in excess of last year's average."
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Yesterday, the Dept of Energy (DOE), reported crude oil inventories fell 191,000 barrels last week, gasoline fell 1.72 million, and distallate fell 63,000.
Analyst, Paul Y. Cheng, labeled the DOE report as positive for light product. He said, "Although the near-term U.S. and global demand outlook are less than inspiring, the core product crack outlook has been improving over the last six months due to the recent wave of refinery shut-down announcements. Following the Petroplus bankruptcy on top of announced and potential closures in the Atlantic Basin by Valero (NYSE: VLO), Hess (NYSE: HES), ConocoPhillips (NYSE: COP), Sunoco (NYSE: SUN), and the possible shutdown of Tesoro's (NYSE: TSO) Hawaii as well as Murphy's (NYSE: MUR) Milford Haven refineries, we estimate that total refining shutdowns could reach 2.4 million b/d in 2012 under the most extreme scenario compared to our estimate of new build additions of 2.3 million b/d, or a slight net capacity reduction."
In conclusion, Cheng said, "Our current base case, however, assumes that about 1.5 million b/d of the refining capacity will actually be shut. Although it will not support a cyclical upturn, it should be supportive of 2012 core product cracks in excess of last year's average."
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