US oil refiners’ Q1 income probably fell regardless of stronger margins

By Nicole Jao

NEW YORK (Reuters) – Buyers expect high U.S. refiners to report quarterly losses, at the same time as their margins enhance, as they brace for the ripple impact from U.S. President Donald Trump’s sweeping tariffs, power analysts stated.

Fuelmakers have seen earnings tumble from document ranges in 2022, when a restoration in demand following the COVID-19 pandemic and Russia’s invasion of Ukraine drove up refined merchandise costs.

Within the first quarter of 2025, margins elevated from final yr’s multi-year lows, however seasonal turnarounds and unplanned outages restricted refiners’ skill to seize revenues.

Marathon Petroleum, the highest U.S. refiner by quantity, is predicted to report a per-share lack of 53 cents, in contrast with $2.58 per share revenue a yr in the past, LSEG estimated. The Findlay, Ohio-based refiner final reported damaging EPS in Q1 2021.

Valero, the second-largest U.S. refiner by capability, is ready to kick off refiner earnings on Thursday, with analysts forecasting revenue of 42 cents per share, down from $3.82 revenue a yr in the past, in response to knowledge from LSEG.

Phillips 66 is predicted to report a lack of 72 cents per share, versus $1.90 per share revenue a yr in the past, in response to LSEG estimates.

UNDER PRESSURE

Earnings had been beneath stress throughout the quarter as a result of decrease common seize charges, which dropped to 63% within the first quarter from 71% a yr in the past, Tudor, Pickering, Holt & Co analyst Matthew Blair stated in a observe.

Seize charges, which symbolize a refining firm’s skill to revenue from market situations, fell partly as a result of heavy seasonal upkeep, unplanned outages and tighter crude differentials.

Impartial refiner PBF Power took its 157,000 barrel-per-day (bpd) Martinez, California, refinery offline in February after a fireplace. The fireplace-damaged items will stay shut till the fourth quarter.

PBF is predicted to report a lack of $2.91 per share, down sharply from 85-cents revenue a yr in the past.

Nevertheless, larger gasoline and diesel futures cracks within the first quarter helped offset some losses.

“Globally, there was a 3 million-barrel-a-day lack of availability from the refining sector throughout the primary quarter in comparison with what we initially had been anticipating,” stated Alan Gelder, vp of refining, chemical substances and oil markets at Wooden Mackenzie.

Margins had been additionally helped by the slower-than-expected ramp up of latest vegetation resembling Nigeria’s Dangote refinery and Mexico’s Dos Bocas, he added.

DEMAND IN FOCUS

Buyers need readability about how the continued commerce battle between the U.S. and China could affect demand for refined merchandise together with gasoline, diesel and jet gas, stated TD Cowen analyst Jason Gabelman.

International oil and gas demand is predicted to develop by 900,000-bpd from final yr, a drop from its earlier expectation of 1.2 million bpd, the U.S. Power Info Administration stated in its newest Quick-Time period Outlook.

Shares of the highest three U.S. refiners fell to their lowest since 2023 in April when U.S. President Donald Trump introduced new reciprocal tariffs.

Margins have held up higher within the refined product area than crude, stated Ben Hoff, head of commodity technique at Societe Generale. However the oblique affect of slower financial development will finally play out in refined merchandise.

“The query is basically not a lot if, however when that begins rippling ahead and creeping into margins,” Hoff stated.

(Reporting by Nicole Jao in New York; Enhancing by Liz Hampton and Nick Zieminski)