Cruel summer for US refiners.
Summer driving season is in full swing and American motorists are filling their tanks at a healthy clip, but that is not swelling the profit margins as much as usual at US independent oil refiners such as PBF Energy and Valero Energy.
In April, executives shrugged off the industry's lousy first quarter as an aberration that would be remedied this summer. "We still are bullish gasoline and bullish octane," PBF CEO Tom Nimbley told investors in an earnings call back then. "The driving season really hasn't hit that hard yet."
Nimbley was right about the surging summer demand. But refiner margins are still being squeezed as gasoline and diesel inventories stubbornly sit well above five-year averages. Summer gasoline demand usually fattens margins for refiners with seasonally high levels for the crack spread, the premium of a barrel of gasoline over a barrel of crude oil.
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