Tesoro Corporation’s (TSO) third-quarter 2009 results came in significantly better than expected, helped by better demand balance in the company’s key West Coast region. Earnings per share came in at 24 cents, against Zacks Consensus Estimate of a penny loss. Tesoro’s outperformance is in contrast to the steep losses posted by the other major refiners that have already reported -- Valero Energy Corp. (VLO) and Sunoco Inc. (SUN). However, compared to the year-ago period, Tesoro’s earnings per share plunged 87.1%, while sales declined 45.4% to $4.7 billion -- severely hampered by depressed refining margins and lower throughput on the back of weak fuel demand and high inventories. Refining Segment Results Tesoro’s refining segment experienced a significant decline in operating income (operating income of $84 million vs. $476 million in the year-earlier quarter) due to struggling profit margins for the production of distillate ...

OUTLOOK The improving economic scene, both here in the U.S. as well as worldwide, is the main driver of the current oil rally that has seen the commodity settling around the $80 per barrel level. But high levels of product inventories (particularly gasoline), along with still higher supplies, will limit any sustained crude gains, in our view. But way too many factors weigh on oil prices, from OPEC decisions and geostrategic tensions to the value of the U.S. dollar and seasonal variables, to definitively size up each one of them for their respective impact on prices.  In its latest release, the Energy Information Administration (EIA) reported a less-than-anticipated increase in crude stockpiles, which rose by 800,000 barrels for the week ending October 23. However, current crude oil stocks, at 339.9 million barrels, still remain 9% above the year-earlier level as well as above the upper limit ...

Recently, the federal government’s Energy Information Administration (EIA) issued an overall bullish report, showing a smaller-than-expected build in crude stockpiles. Further, the data showed that gasoline inventories were down as predicted, while distillate stocks also declined, though fell short of expectations. In its release, the agency said that crude inventories rose by 1.3 million barrels for the week ending October 16, much lower than analysts' expectations. This is the second successive week in which the crude buildup has been lower than originally anticipated. A major contributing factor to the modest increase can be attributed to a fall in crude oil imports, which dropped to the lowest level in two months. Current crude oil stocks, at 339.1 million barrels, are 8.9% above the year-earlier level and remain above the upper limit of the average for this time of the year (depicted in the first EIA chart below). The ...

Yesterday, the U.S. Energy Department's weekly inventory release showed a less-than-expected build in crude stockpiles. However, the headline news was centered on a sharp drop in gasoline stocks and refinery utilization that pushed oil prices to a fresh 2009 peak and lifted energy stocks. The federal government’s Energy Information Administration (EIA) reported a 400,000 barrels rise in crude inventories for the week ending October 9, much less than analyst expectations. The modest increase can be attributed to scaled back operations by the refiners (prompted by weak profit margins) even as imports fell. This follows last week’s report, which showed an unexpected rise in oil supply figures, against consensus forecast of a buildup. Current crude oil stocks, at 337.8 million barrels, are 9.6% above the year-earlier level and remain above the upper limit of the average for this time of the year (depicted in the first EIA chart ...

Oil prices are hovering around the $63 mark, with the market 'see-sawing based on people's perception of the US economy -- they don't really know if the recovery is durable', says Bloomberg.  Gazprom borrowed more than $11 billion in the first six months of 2009, with $4.5 billion coming from Sberbank.  Apparently its core earnings decreased by 50% in the first quarter.  The state gas giant may issue a 10-year eurobond.  The European Commission is requiring Naftogaz Ukrainy, Ukraine's state-run energy firm, to conduct an independent audit of its gas reserves to be able to prove eligibility for a loan.  Bloomberg reports on how oil refiners worldwide are planning to shut or sell plants with the drop in oil demand, with energy analysts arguing that surviving the financial crisis 'is all about how competitive your refinery is'.   ...

Two Big Reasons to Dump your Oil Refinery

Tony Daltorio, The Investment U Research Team

Quite simply, this is not a good time to be in the business of refining oil in the United States.

The obvious reason for this is the continuing recession which has led to lower demand for gasoline and other refined products. With the summer driving season past the halfway point, having the word ’staycation’ become commonplace is not good news for the refiners.

But that’s not all. And it goes well beyond simple economic downturn.

There are other factors at work. And unfortunately, many have escaped the notice of many investors and much of Wall Street.

While everyone was focused on the sharp rise recently of the price of WTI crude oil, other things have been conspiring against domestic refiners of all sorts. Here’s what you need

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Air Products Has Severe Top-Line SlowdownSales at Air Products (APD) are down 29% in April and May. This is faster than the 24% drop in April, with May obviously being a much larger negative number. Air Products reported the steepest sales decline in its tonnage gases unit, whose customers include oil refiners that need hydrogen and metal fabricators that need oxygen.Sales in that unit dropped 41 percent in April and May compared to a year earlier due to lower demand from chemical producers and steel-makers. Read the full analyst report on "APD"Zacks Investment Research

The so-called Waxman-Markey bill snaking its way through the greasy halls of Congress looks likes the most expensive thing to hit the economy since the financial crisis began. Even the normally mild-mannered Wall Street Journal called it “one of the most ambitious efforts to re-engineer American social and economic behavior in decades, presenting risks and opportunities for a wide array of businesses from Silicon Valley to the coal fields of the Appalachians.”

First off, the stated objective of cutting carbon emissions by 83% by 2050 will go down in history as outrageous – akin to when Who drummer Keith Moon drove his Lincoln Continental into the pool at the Holiday Inn. I think members of Congress must be smoking the same thing Moon was.

To show you how patently ridiculous such a goal is, I turn to Questar’s CEO – a man with the unfortunate name of Keith Rattie. Questar (NYSE:STR)

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Highlights include Pacific Ethanol (PEIX), Archer Daniels Midland (ADM), ConocoPhillips (COP) and Valero (VLO).Higher Ethanol Mix Bad for RefinersThe Environmental Protection Agency (EPA) initiated the process yesterday to increase the amount of ethanol that can be blended into a gallon of gasoline from the present 10% to 15%. The agency is seeking public comments in response to an application last month by Growth Energy, an industry lobbying group headed by retired General Wesley Clark. The agency is required to decide the issue by December 1, 2009.Aside from ethanol producers such as Pacific Ethanol (PEIX) and Archer Daniels Midland (ADM) and the corn lobby, the issue is of immense significance to conventional oil refiners like ConocoPhillips (COP) and Valero (VLO) and automobile manufacturers.The ethanol producers have been hit hard by a combination of supply-demand ...

The Axial Vector Energy Corp. (AXVC.PK) Petrosonics joint venture offers the world’s oil processing industry a technology and cost savings that is sorely needed. Axial Vector’s earlier announcement that it has teamed up with Petrosonics to form a joint venture company named Petro-AVEC means that Petrosonics’ unique sulfur removal process will now have the backing to be marketed worldwide. Axial’s AVEC Acquisitions subsidiary is contributing nearly $7 million to the venture to help market and continue development of the technology.

The innovative process uses high power ultrasound to reduce sulfur, nitrogen, and trace metals in oil. A side benefit is the simultaneous decrease in oil density and hydrogen loss. Put simply, the net result is a product that is worth more, at a cost far less than competing technologies. Petrosonics owns all of the significant intellectual property associated with the technology, which

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