June 2016

Trends and Resources

Industry Perspectives: Refining’s silver lining fades for major oil companies

For major oil companies, refining has offered a silver lining since the oil market crash that began in mid-2014. While overall profits have declined, healthy margins from the refining sector—owing to lower feedstock prices—have insulated many top companies from major losses.

For major oil companies, refining has offered a silver lining since the oil market crash that began in mid-2014. While overall profits have declined, healthy margins from the refining sector—owing to lower feedstock prices—have insulated many top companies from major losses. However, the recently completed earnings season showed clear signs that the “downstream advantage” could be eroding. Rising inventories Throughout the downturn, large integrated producers have touted the virtues of a business model that both produces oil and refines it. But growing fuel inventories and weak demand are now hammering many global refiners, turning a typical advantage for integrated companies on its head

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