Independent US refinery firms such as Valero Energy Corp. and Phillips 66 may again present disappointing quarterly earnings reports, with annual industry are likely to be the worst since the beginning of shale boom in the United States.
The companies hoped to recover from the weak first quarter due to good demand for gasoline. Meanwhile record stockpiles of gasoline and diesel products denied them from that opportunity.
High volumes of imports and the fact that the company boosted gasoline production to the peaks, led to an increase in reserves much higher than seasonal peaks and to record highs on the East Coast. Last EIA reports showed that gasoline stockpiles rose by 0.9M barrels which is well above the upper limit of the average range.
In recent weeks, analysts have downgraded the forecasts for the second quarter in anticipation of the reporting season, with expectations for the rest of the year worsened as well. Some of them now predict that oil companies can go on more drastic measures to preserve margins and reduce reserves.
Analysts in the past 30 days have dramatically added to the gloom on earnings forecasts of major oil refining companies. For example, earnings forecast of Valero fell by 19 percent per share, according to StarMine, Phillip 66 – by 17%.
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