Oil refineries to pick up production, even as profits remain low

Strong turbulence in price, production and demand over the past year has proven difficult for many oil refineries, leading to a substantial downturn in output. Though conditions look likely to remain tough, The Wall Street Journal reports that output at the least is expected to rise.

The International Energy Agency, the Paris-based energy group tied to the Organisation for Economic Co-operation and Development, released its monthly report projecting that refinery runs would increase to around 75.8 million barrels per day in the first quarter. That would represent a 1.2 million barrel per day, around 1.6 percent, increase from the first quarter of 2011.

"Refining margins are doing really bad--they're really weak and negative for almost all regions, but we still expect throughputs to pick up from October lows as refineries come back from maintenance," Toril Bosoni, an IEA senior oil market analyst, told the Journal.

Despite this rise in production, profit margins are expected to remain tight largely because of low gasoline prices, compared to cost of crude oil, and much of the added production will go to replenishing depleted stocks.

MarketWatch notes that the end of the year has brought bad news to an already hard-hit industry, as warm temperatures and continuing economic uncertainty reduce demand for many oil products.

The PennEnergy Research area offers further monthly information on refinery output.

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