By Sheila Dang and Shariq Khan
HOUSTON – Massive Oil executives this week noticed little prospect of a near-term enchancment in refinery income after Chevron, Exxon Mobil and Shell all reported fourth-quarter earnings that had been hit onerous by a downturn within the margins for producing gasoline.
A rise in international refining capability in 2024, mixed with sputtering demand progress has damage refining margins.
Chevron’s shares declined 4% after it reported a loss in its refining enterprise for the primary time since 2020, inflicting the No. 2 U.S. oil producer to overlook Wall Road’s revenue estimate.
“This pattern now we have seen of margins softening by 2024 is one thing you possibly can count on to proceed to see, to increase into 2025,” Chevron CEO Mike Wirth stated in an interview.
“It was a weak fourth-quarter, there is not any doubt about it,” he stated on a post-earnings convention name in response to a query from an analyst concerning the refining downturn.
“I am not going to name it an ideal storm, but it surely was 1 / 4 wherein every part went a method and it was unfavourable.”
Wirth stated Chevron would give attention to what it could management in an effort to bounce again, together with lighter scheduled upkeep for refineries over the following 12 months.
Exxon Mobil’s shares fell 2.5% after it reported a 75% plunge in adjusted earnings from refining in contrast with the third quarter. The broader S&P 500 Vitality Sector index was down 2.8% on Friday.
The refining enterprise stays beneath strain from further gasoline provide getting into the market after new refineries opened in several international locations all over the world, stated Exxon’s Chief Monetary Officer Kathryn Mikells in an interview.
“That is actually what we’re watching as we look forward to 2025,” she stated.
The No. 1 U.S. oil producer nonetheless beat revenue estimates with greater manufacturing from the Permian basin, the highest U.S. oilfield, and Guyana, the most recent oil hotspot.
UK-based Shell stated on Thursday that whereas it had no plans to exit the refining enterprise, it didn’t plan to develop both.
The corporate’s fourth-quarter earnings almost halved from the earlier 12 months to $3.66 billion, partly as a result of weaker refining margins.
Shell bought its refining and chemical compounds hub in Singapore final 12 months and plans to close down one other plant in Wesseling, Germany.
HIT TO INDEPENDENT REFINERS
Whereas greater oil and fuel manufacturing helped cushion oil majors from the affect of decrease refining income, the pure-play refiners took a success as gasoline demand faltered within the U.S. and China, the 2 largest oil customers.
Phillips 66’s fourth quarter revenue plummeted to $8 million from $1.26 billion within the year-ago quarter. Valero’s refining revenue dropped 73% within the fourth quarter.
