Oil price set to dip, margins recover: Chevron
BEIJING (Reuters) - Crude oil prices are likely to retreat from near $100 to around $80 a barrel, boosting refining margins which have been dented by the rally, a senior Chevron Corp. executive said on Wednesday.
Ashok Krishna, vice president of technology for Chevron global downstream said the refining industry was particularly squeezed because crude's record rally coincided with the end of the summer driving season, when gasoline demand usually falls.
His outlook for next year was more positive although he did not expect margins to recover to highs of $24 hit earlier this year, he told reporters on the sidelines of the Hart world refining and fuels conference in Beijing.
"My view is long term prices won't stay this high, they will probably be in the $80 range, and gasoline prices will adjust to this, giving reasonable margins," Krishna said, adding that this price outlook was a personal view, not Chevron's position.
The firm said last week that third-quarter earnings fell more than 25 percent from a year earlier, missing analyst estimates on sharply lower profits from gasoline production.
U.S. refining margins have plummeted by as much as 90 percent from record highs reached in May. Crude oil hit what was then a record of $78 in September before marching on to new highs near $100 this month.
But Krishna said the rise had not dented demand growth.
"I don't think demand is going to drop off based on price any time soon, nothing I see in China, India or the US is going to really cause that," he said.
"I think we are stuck with ever increasing demand and we are stuck with more difficult to find crude," he added.
However despite rapidly rising demand in China, the world's number two oil consumer, Chevron is not looking for refinery investments there, Krishna said, in part because it is reluctant to enter a loss-making market.
State-set price caps for diesel and gasoline have pushed Chinese refiners into the red much of the time in recent years.
"Marketing we have some presence and we have been involved in some upstream projects," Krishna said.
