Refining's silver lining loses luster at Exxon and Chevron
By Ernest Scheyder
HOUSTON (Reuters) - Exxon Mobil Corp and Chevron Corpon Friday reported their most dismal quarterly results in more than a decade on low oil prices and an oversupplied fuel market that hurt what had been lucrative refining margins.
As crude prices slid 60 percent from mid-2014, large integrated energy companies have touted the virtues of a business model that both produces oil and refines it. Refiners typically see profitability increase when the price of their main feedstock - oil - falls.
But growing fuel inventories and weak demand are now hammering the refining industry, turning a typical advantage for integrated oil companies on its head.
First-quarter pain in the downstream units, which came after major U.S. refiners slashed the amount of cheap crude they were processing in February, is a sign the road ahead for oil majors may turn even rockier. Their upstream exploration and production units have been reeling for months from the crude price crash.
Both Exxon and Chevron sought in Friday conference calls with investors and analysts to downplay the weakness in their refining units.
Chevron Chief Financial Officer Pat Yarrington acknowledged lower worldwide refining margins on the call.
Jeff Woodbury, Exxon's vice president of investor relations, blamed the weak results on lower demand and high inventories of refined gasoline and other products after a relatively warm North American winter.
Lower profits from Exxon and Chevron's refining divisions contributed to weaker overall results for both companies. Continued...