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 laborious by a downturn within the margins for producing gasoline.
A rise in international refining capability in 2024, mixed with sputtering demand development has harm 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 development we have now seen of margins softening by way of 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 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, nevertheless it was 1 / 4 through which the whole lot went a technique and it was damaging.”
Wirth stated Chevron would deal with what it could possibly management with a view 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 below stress from extra gasoline provide getting 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 sit up for 2025,” she stated.
The No. 1 U.S. oil producer nonetheless beat revenue estimates with larger 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 almost halved from the earlier yr to $3.66 billion, partly as a consequence of weaker refining margins.
Shell bought 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 larger oil and fuel manufacturing helped cushion oil majors from the affect of decrease refining income, the pure-play refiners took successful 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.
