Record runs allowed U.S. refiners to continue a multiyear streak of strong margins in 2018 despite rising crude prices during the first three quarters and a weaker fourth quarter after prices tanked in October. While rising crude prices threatened refinery margins, a high Brent premium over domestic benchmark West Texas Intermediate kept feedstock prices for U.S. refiners lower than international rivals. The availability of discounted Canadian crude also produced stellar returns for Midwest, Rockies, and Gulf Coast refiners configured to process heavy crude. As they have for the past few years, export markets soaked up surplus refined product produced by record processing. Product prices only weakened in the fourth quarter when gasoline inventories began to rise. This note highlights major trends and influences in the U.S. refining sector during 2018 and looks forward to 2019.

Record Runs and Strong Margins Boosted Refiners in 2018

Major trends and influences in the U.S. refining sector.
Sandy Fielden, Director, Oil and Products Research.

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