OIL
Big Oil executives this week saw little prospect of a near-term improvement in refinery profits after Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM) and Shell (LON:SHEL) all reported fourth-quarter earnings that were hit hard by a downturn in the margins for producing fuel.
An increase in global refining capacity in 2024, combined with sputtering demand growth has hurt refining margins.
Chevron’s shares declined 4% after it reported a loss in its refining business for the first time since 2020, causing the No. 2 U.S. oil producer to miss Wall Street’s profit estimate.
“This trend we have seen of margins softening through 2024 is something you can expect to continue to see, to extend into 2025,” Chevron CEO Mike Wirth said in an interview.
“It was a weak fourth-quarter, there’s no doubt about it,” he said on a post-earnings conference call in response to a question from an analyst about the refining downturn.
“I’m not going to call it a perfect storm, but it was a quarter in which everything went one way and it was negative.”
Wirth said Chevron would focus on what it can control in order to bounce back, including lighter scheduled maintenance for refineries over the next year.
Exxon Mobil’s shares fell 2.5% after it reported a 75% plunge in adjusted earnings from refining compared with the third quarter. The broader S&P 500 Energy Sector index was down 2.8% on Friday.
The refining business remains under pressure from additional fuel supply entering the market after new refineries opened in different countries around the world, said Exxon’s Chief Financial Officer Kathryn Mikells in an interview.
