Year-End 2018
The first half of 2018 provided positive momentum for refineries that had increased revenues and margin expansion in the second half of 2017. Following a period of steady gains, crude prices fell significantly in the fourth quarter of 2018. Lower prices make it more difficult for refiners to extract margin, particularly when declines come at a rapid pace.
Despite the declines, crude differentials persist, particularly between Brent and WTI, which is a positive sign for refiners. Crack spreads are also high and expected to continue with MARPOL 2020 looming.
The future impact of many regulations surrounding the oil & gas industry, such as the RFS, is still uncertain. U.S. trade is also uncertain as the USMCA still requires ratification and U.S.-China trade lacks a resolution.
