The reduced estimate reflects a more cautious outlook on global oil product demand
Merrill Lynch & Co. slashed its 2009 European oil refining margin estimates by 28 percent and downgraded Neste Oil Oyj and Saras SpA to ''underperform,'' citing a slowdown in global demand growth and possible supply increases.
The reduced estimate reflects ''a more cautious outlook on global oil product demand against a backdrop of significant supply additions,'' London-based analyst Hootan Yazhari wrote in a note to clients today.
Refining margins reflect the profit made from turning a barrel of oil into fuel products such as diesel and gasoline.
Refinery capacity is expected to rise by more than 1.8 million barrels a day in the next 12 months compared to demand growth of 400,000 barrels, according to the note. This will lead to the lowest refinery operating rates in five years.
UBS AG yesterday cut its refining margin estimate for 2009 and 2010 by 20 percent ''in light of the worsening economic environment'' and overcapacity, London-based analyst Anish Kapadia wrote in a report.
Merrill had previously rated Neste Oil, Finland's only oil refiner, a ''neutral'' while Saras was recommended as ''buy.'' Neste, due to release third-quarter earnings tomorrow, is the first of the European refiners to report results. BP Plc follows on Oct. 28.
ERG SpA, Italy's biggest exporter of refined oil products, was lowered to ''neutral'' from ''buy'' at Merrill.
Complex refiners, or those with a diesel-producing bias, such as Neste and Saras, may see a ''sharp pull back'' in 2009 earnings, Merrill said. Profits for so-called simple refiners, or those with more of a gasoline focus, such as Petroplus Holdings AG, may be ''hurt'' more, Merrill said.
Diesel prices may contract to $15 a barrel above oil next year from $30 a barrel currently, according to Merrill estimates. Typically fuel is more expensive than oil, its feedstock, to reflect the cost of processing.
Gasoline margins are expected to fall to $4 a barrel in 2009 below a five-year average of $7.80 a barrel, according to Merrill.
Türkçe karakter kullanılmayan ve büyük harflerle yazılmış yorumlar onaylanmamaktadır.