By Sheila Dang and Shariq Khan
HOUSTON – Huge Oil executives this week noticed little prospect of a near-term enchancment in refinery earnings after Chevron, Exxon Mobil and Shell all reported fourth-quarter earnings that had been hit laborious by a downturn within the margins for producing gasoline.
A rise in world 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 Avenue’s revenue estimate.
“This pattern we’ve got seen of margins softening by means of 2024 is one thing you may anticipate to proceed to see, to increase into 2025,” Chevron CEO Mike Wirth stated in an interview.
“It was a weak fourth-quarter, there is no 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 during which every little thing went a method and it was detrimental.”
Wirth stated Chevron would give attention to what it could possibly management with the intention to bounce again, together with lighter scheduled upkeep for refineries over the subsequent yr.
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 Power Sector index was down 2.8% on Friday.
The refining enterprise stays underneath strain from further gasoline provide coming into the market after new refineries opened in several nations world wide, 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 increase both.
The corporate’s fourth-quarter earnings practically halved from the earlier yr to $3.66 billion, partly as a result of weaker refining margins.
Shell offered its refining and chemical compounds hub in Singapore final yr and plans to close down one other plant in Wesseling, Germany.
HIT TO INDEPENDENT REFINERS
Whereas greater oil and gasoline manufacturing helped cushion oil majors from the impression of decrease refining earnings, 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.
