By JENNY GROSS
LONDON -- European refiners are seeing gasoline profits
fall, and analysts say they're likely to continue to slide
because of weak demand for the fuel in Europe and the US.
Profits on gasoline in
Northwest Europe have nearly halved to $10.73/ton from
$19.23/ton, the lowest level in more than two months, according
to calculations by Dow Jones Newswires.
Even this year's peak driving season in the US, a period
when producing gasoline is usually most profitable for
refiners, demand is down, analysts said.
This week, the US Energy Information Administration reported
that gasoline stockpiles rose 4.1 million bbl, the biggest
weekly rise since Dec. 2, 2011.
"The downside fits with our general perception that the
motor fuel's crack has been over valued recently and is likely
to wane further as refiners have adjusted themselves for the
remainder of the peak driving season, while the demand outlook
remains bleak," JBC Energy said in a note this week.
Massimo Vacca, head of investor relations at Saras, an
Italian refiner, said the recent rise in crude prices and
increase in gasoline stocks had contributed to the squeeze on
"The rebounding margin was not driven by strength in demand,
but [rather] a drop in [crude oil] prices," Mr. Vacca said.
"Now that prices have stopped dropping, product prices have
kept going down because there's no demand."
He said that as older vehicles are gradually replaced on the
US roads with newer more fuel-efficient cars, there is less
In addition, the overall economic backdrop in the US and
Europe is uncertain, and people tend to rein in spending during
US economic growth pulled back further during the second
quarter of the year as consumer spending slowed, according to
data released Friday.
Dow Jones Newswires