New York (Reuters): US 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 US gasoline demand comes as US 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 US independent refiners reaped the profits as plunging pump prices and a growing economy helped fuel a surge in demand. US 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.”
