A combination of diminished global output and rising global demand have helped reduce the global supply glut that dragged on oil prices for years. Production cuts from the Organization of Petroleum Exporting Countries and their allies have largely contributed to the cut in supply. Meanwhile, expanding economies around the world has bolstered demand for raw materials such as crude oil.
Gasoline margins are a source of concern for refiners because export growth is not keeping pace increased output.
“Although already at their lowest in four years, gasoline margins remain at risk, however. Thanks to strength in distillate margins and wide crude spreads, refiners’ total margin has remained attractive, encouraging high utilization rates; combined with capacity increases, this has resulted in record levels of production,” according to Morningstar.
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As Morningstar notes, refiners have been boosting buybacks and dividends in recent years, trends that are expected to continue going forward.
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