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U.S. Refiners Face Weakening Demand at Pump - ASHARQ AL-AWSAT English Archive
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New York- U.S. refiners are facing the prospects of weakening gasoline demand for the first time in five years, stoking fears that earnings this year may be even worse than the dismal performances seen in 2016.

The sign of weakening U.S. gasoline demand comes as U.S. refiners are in the midst of reporting their worst year of earnings since the U.S. shale boom started in 2011. The oil boom turned to bust in 2014, and U.S. independent refiners reaped the profits as plunging pump prices and a growing economy helped fuel a surge in demand.

U.S. refiners amassed large inventories that punished margins last year, but record gasoline demand and robust exports helped provided a firewall against further slippage. Now the industry faces the prospects of higher crude prices following global production cuts and fresh federal data that suggests their gasoline demand safety net may be eroding.

“We are very cautious on refining margins, and on demand,” Sarah Emerson, a managing principal at ESAI Energy LLC, said. “When oil prices goes up, gasoline demand is going to go down.”

The U.S. Energy Information Administration said last week that the four-week average of gasoline supplied in the United States was 8.2 million barrels per day, lowest since February 2012. U.S. gasoline demand is closely watched by traders since it accounts for roughly 10 percent of global consumption.

“It’s tough to base conclusions solely on the weekly data, which can be off significantly,” said Mark Broadbent, a refinery analyst with Wood Mackenzie. “If the demand is low as it the data shows, then it’s a going to be real problem for refiners.”

Republicans in the U.S. House of Representatives are considering possible changes to the design of their controversial border adjustment tax proposal to accommodate industries worried about being harmed by the provision, a top lawmaker said on Friday.

The measure, a centerpiece of the House Republican tax reform blueprint backed by Speaker Paul Ryan, is intended to encourage investment and manufacturing in the United States. But it faces mounting pressure from U.S. retailers, oil refiners and automakers who fear it could result in higher prices for consumer goods including gasoline.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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