Moody’s has changed its outlook for the Global Independent Refining and Marketing (R&M) sector to stable from negative. The outlook reflects the rating agency’s view of fundamental credit conditions for the industry in the coming 12-18 months.
Gasoline demand continues to face a long-term secular decline in OECD countries, Moody’s says, while global demand for distillate will grow next year, in line with its forecast of 2.9%-3.9% GDP growth worldwide.
While worldwide capacity overhang will increase next year, continued capacity rationalization should help the sector to rebalance over time, Moody’s says.
Up to 1.7 million barrels per day in capacity additions are expected in 2013, which is well above demand growth of 0.8 million barrels a day. Still, successful rationalization supported companies’ margins in 2012, and rationalization will continue as additional capacity comes online by 2015.
Feedstock flexibility is increasingly driving profitability for refiners. While US firms such as Marathon Petroleum, CVR Energy, HollyFrontier and Northern Tier Energy will benefit from their access to growing North American oil production and historically low natural gas prices, those that rely on imported crude or with higher cost structures, such as Chilean firm Empresa Nacional del Petroleo, will face disadvantages.
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