US gasoline refining profits fall to lowest levels in 11 months

14 November 2011 21:59  [Source: ICIS news]

HOUSTON (ICIS)--Gasoline profits for refiners running West Texas Intermediate (WTI) crude dropped to their lowest levels since December 2010 on rapidly falling gasoline prices, an analyst said on Monday.

Gasoline refining profits were at $8.34/gal on Monday, the lowest since $8.08/bbl on 16 December 2010.

Gasoline futures settled at $2.5353/gal on Monday, while the settlement was $2.3043/gal on 16 December. Gasoline futures settled on Monday at the lowest price since 4 October, when the settlement was $2.4880/gal. 

Crude oil prices have not matched the declines in gasoline. On 1 November, gasoline settled at $2.6244/gal and crude oil settled at $92.19/bbl. On Monday, gasoline prices were down 3.4%. Crude oil settled at $98.14/bbl on Monday, putting prices up 6.5% since the beginning of November.

Gasoline is falling harder on expectations that a supply glut will worsen in coming months as refiners increase production of diesel fuel, which has been tight on supply. To increase diesel production, gasoline production also goes up.

Gasoline demand through most of October was about 5-6% lower than October 2011, according to the Energy Information Administration (EIA). Increasing gasoline production will boost extraneous gasoline supplies in a climate of low demand, causing prices to fall further, said analyst Phil Flynn with PFGBest.

“Supplies for diesel fuel are tight, and refiners are going to have to kick up production of diesel fuel,” Flynn said.


By: Sheena Martin
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