Of the four largest U.S. oil refiners, two boosted net income in each quarter of 2015. Two of the four report fourth-quarter results later this month, and the other two report in the first two weeks of next month.
Thursday’s news that Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) had raised its stake in the country’s largest refiner, Phillips 66 (NYSE: PSX), to a little more than 12%. Buffett is well-known for playing the long game, but in the near term analysts are not expecting refiners to benefit much from falling crude prices.
Only one refiner, Tesoro Corp. (NYSE: TSO), is expected to post higher earnings per share in the fourth-quarter of 2015 than it did in the 2014 fourth quarter. What’s odd about that is that at the end of December 2014, the spot price of West Texas Intermediate (WTI) at the Cushing, Okla., hub was $52.72 a barrel. At the end of 2015, that had dropped by about $15 a barrel to $37.13. Low crude oil prices typically mean that refiner margins and profits rise.
At the same time, the average retail price for a gallon of regular gasoline was $2.299 at the end of 2014, and continued to fall in the first seven weeks of 2015, reaching a low of $2.044 at the end of January, then rising to $2.448 at the end of the first quarter. In that quarter, refiners’ quarterly net income slipped to its lowest level of the past four quarters.
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