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Oil refining capacity may not fully recover, execs say

Executives at Phillips 66 (NYSE:PSX) and PBF Vitality (NYSE:PBF) advised buyers at this time that some refining capability at present offline would possibly completely shut relying on the long run course of the coronavirus, whereas new capability additions possible will probably be delayed.

Demand for gasoline and distillates has recovered by 80%-90% because the worst of the pandemic, however jet gasoline demand has rebounded solely 30%, and since refineries can’t make merchandise equivalent to diesel with out producing jet gasoline as nicely, output will probably be restrained, PBF CEO Thomas Nimbley stated.

“I am not satisfied that we might get to full utilization on this trade if jet demand is the place it’s at this time,” Nimbley stated on at this time’s earnings convention name.

PBF ran its six refineries at a mean 70% of capability throughout Q2, and Nimbley stated they are going to proceed to run at decrease charges till sustained product demand justifies greater manufacturing.

Phillips 66 stated its refinery utilization in July has been within the low 80% vary in contrast with a mean 75% utilization price throughout Q2.

Demand enhancements for this fall will probably be affected by how a lot the resurgence of COVID-19 impacts individuals’s commutes to work and youngsters returning to highschool, Phillips execs stated, estimating that driving to and from college accounts for ~5% of gasoline demand.

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