Prudential raises its 2004 average US refining margin forecast

Prudential Equity Group LLC, New York, raised its 2004 average US refining margin forecast to $8.85/bbl from $8.75/bbl to account for a stronger than expected third quarter. Hurricane Ivan, by disrupting Gulf Coast refinery operations, lifted margins late in the quarter, said analyst Andrew Rosenfeld.

Oct. 26, 2004

By OGJ editors
HOUSTON, Oct. 26 -- Prudential Equity Group LLC, New York, raised its 2004 average US refining margin forecast to $8.85/bbl from $8.75/bbl to account for a stronger than expected third quarter.

Hurricane Ivan, by disrupting Gulf Coast refinery operations, lifted margins late in the quarter, said analyst Andrew Rosenfeld.

The US refining margin averaged $8.85/bbl in the third quarter, up 14% from the same quarter last year for companies Prudential follows.

Rosenfeld expects margins to decline as the industry heads into a seasonally weaker fourth quarter and as product inventories rebuild after falling after the hurricane.

He expects margins to carry a "risk premium" reflecting uncertainties about crude supply.

Prudential's 2005 US refining margin forecast of $6.85/bbl is under review in view of record margins recorded so far this year, low gasoline inventories, and concern over US and European distillate supply.