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Refineries continue to close amid declining oil demand

The coronavirus epidemic continues to affect refinery profit margins. As a result, several refineries and major oil companies have recently declared permanent closures in the United States and Asia.

Analysts believe that some expensive refineries in Europe are likely to close in the next few years. 

Oil refineries are either forced to resist or have to close during the coronavirus crisis. Some refineries have closed. Last week, Phillips 66 announced plans to close the Rodeo San Francisco and Santa Maria refineries in California. The company plans to merge the two refineries to launch a renewable fuel production unit.oil prices concept dice rising

In Asia, Shell, one of the leading businesses in the Philippines, plans to turn the Tabangao oil refinery into a complete import terminal. Shell said that refining profit margins, which have been declining since the beginning of this year, have fallen sharply. They are likely to remain low in the medium term.

According to the Wood Mackenzie Institute, about 10 percent of European refineries, with a capacity of 1.4 million barrels per day, are in danger of closing down within the next three years. The energy consulting firm expects the world’s total refinery net profit to reach $1.40 a barrel in 2020. This is the lowest figure in a century. The world’s refining profit last year was $3.70 a barrel. By 2015, refinery profit margins are forecast to reach $2 to $3 a barrel. However, they will still be 20% lower than Wood Mackenzie’s prediction before the coronavirus crisis.

 

Black gold prices skid since concerns over US demand recovery support the market

Oil prices dropped on Wednesday on growing concerns about fuel demand recovery. Talks on a post-coronavirus economic stimulus package overshadowed a bigger-than-expected decline in US crude stocks.

Brent crude oil futures declined by 38 cents, or 0.8%, to trade at $45.08 a barrel. WTI crude futures dropped by 25 cents, or 0.6%, to trade at $42.64 a barrel.

Hiroyuki Kikukawa, the general manager of research at Nissan Securities, stated that demand concerns weighed on the commodity prices. Meanwhile, US economic stimulus measures are still nowhere in sight.

Kikukawa stated that the drop in US crude stocks restrained losses. According to his predictions, oil prices will stay within a tight range since signals the commodity market receives are mixed.

OPEC and its allies’ compliance with cuts on oil production stood at 95-97% in July.

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