European refining margins shrank by three-quarters amid weak demand and competing imports, according to data from Total SA, the region’s second-largest oil company.
Profit sank to $6.60 a metric ton (90 cents a barrel) in the first quarter from $26.90 a ton a year before, the Paris-based company said today in a statement, citing its European Refining Margin Indicator. The data represent margins for a northern European refinery at prevailing prices not necessarily Total’s actual results, it said.
The margins in the quarter were at a “very weak” 10-year low, Bertrand Hodee, an analyst at Raymond James with an outperform rating on the French producer, said in a note. “But we expect Total to publish a resilient set of earnings.”
Total plans to cut French processing capacity from 2015 as demand falls, it said in February, joining others in curbing production. Earnings from processing crude into fuels such as gasoline and diesel have also been hit by rising imports from plants in the U.S., Asia, Russia and the Middle East.
French diesel demand fell 0.7 percent in March from a year earlier, according to the Union Francaise des Industries Petrolieres industry lobby.