Refiners’ Margins are at Historic and Painful Lows

September 11, 2020

As one measure of refineries’ profitability is the profit margin (“Crack Spread”), the difference between the price of a refined product and the price of the underlying crude oil.  For example, the first chart below is the difference between the December Heating Oil (ULSD) price and the December WTI Crude Oil price.  The current December Crack spread (black line) has been declining since January and is currently below $10.  We need to go back to the 2009 recession to observe lower Heating Oil crack spreads.

Comparing the December Heating Oil crack spread with the December RBOB Gasoline crack spread (the second chart below), we observe that the Gasoline crack was even negative mid-March when the US health authorities announced the COVID-19 lockdown.  It has been recovering, but still at historically low levels

The charts below can be constructed in the Fundamental Analytics platform under Prices > Instruments and Spreads > ULSD NY Harbor, RBOB Gasoline.


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The Fundamental Analytics Team

The information provided here is for general informational purposes only and should not be considered individualized investment advice. All expressions of opinion are subject to change without notice in reaction to shifting market conditions.

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