In the second quarter of 2020, US oil refiners are seen to report the worst second-quarter results in a decade as the pandemic has battered demand and summer travel.
The latest US data saw fuel consumption tumbled as auto travel slumped by 25% year-on-year and posted 75% nosedive in airport passengers.
According to the US Energy Information Administration (EIA), refinery crude processing rates were 17% lower than the seasonal average over the past five years at 2.8 million bpd. High inventories, driven by the past optimism on economic reopenings, have hurt the profits instead.
Companies with an intensive presence in the West Coast would have more problems, such as extensively weak refining margin as California is having its second coronavirus-related lockdown, raking up damage in fuel demand.
Credit Suisse said that it does not foresee any recovery of gasoline demand to pre-pandemic levels in California. It said that several refineries in the region could be idled to limit losses.
However, refiners with retail networks could still benefit from consumers who avoid big retails, as shown in the quarter’s increases in tobacco and beer sales. The sales could even offset the lower year-on-year volumes.
