Refiners Shares Drop on High Prices, Flagging Demand
Shares of oil refiners fell, as concern grew among analysts and investors that high gasoline pump prices are putting a big crimp in fuel demand.
In a note to investors, Lehman Brothers analyst Paul Cheng cited fresh data from the Department of Energy and the Federal Highway Administration as further evidence to support his bearish view of the refining sector.
“The latest data suggests that the U.S. demand outlook is worse than our previous base case scenario as well as the market’s consensus expectations. We now think that the U.S. negative demand trend will likely last through at least the next 12 months,” Cheng wrote.
Major refining shares have tumbled over the past year amid skyrocketing crude oil and fuel prices. Fuel prices have not risen as fast as oil prices, squeezing refiners’ profit margins even as consumers are cutting back at the pump.
In afternoon trading, Valero Energy Corp., lost 62 cents at $48.94, and Tesoro Corp. fell 66 cents, or 2.7 percent, to $23.48. Sunoco Inc. dropped $1.31, or 2.9 percent, to $44.24, and Frontier Oil Corp. sank 63 cents, or 2.1 percent, to $29.66.
