# Shell Refining Co (Federation of Malaya) Bhd (SRC) #DAMARU FINANCE

# Shell Refining Co (Federation of Malaya) Bhd (SRC) #DAMARU FINANCE

SRC share price has fallen 64.6% since the start of this year, closing at RM3.02 on Monday -- down 2 sen from the previous day.
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Shell Refining's profit continues to improve on better margins @ US 

NOTES  record levels of gasoline sitting in storage. The market has already had to digest the fact that U.S. crude oil stocks were rising, and investors have done their best to explain away the trend. But now gasoline inventories are climbing to unexpected heights.

the glut of gasoline is now the worst in 27 years. At 259 million barrels, U.S. gasoline storage levels are now at their highest level since the EIA began tracking the data back in 1990.

The petroleum product refiner, which swung back into profitability last year after four years in the red, told Bursa Malaysia on Monday that this was contributed by higher margins and lower operating expenses.

The higher profit was achieved on 24.5% lower revenue of RM1.87bil, which was the result of lower product prices and sales volume.

SRC said its Port Dickson refinery processed 10.2 million barrels of crude oil in Q1, higher by 7% from the corresponding period of last year.

Sales were, however, lower by 1% at 10.4 million barrels versus 10.5 million barrels previously.

By comparison, in the same quarter, Royal Dutch Shell's earnings tumbled on a current cost of supplies basis to US$0.8bil from US$4.8bil a year earlier.

On prospects for the year, SRC said: “The outlook for refining margins remains uncertain for 2016 as margins will be influenced by international supply and demand for petroleum poducts, as well as seasonal and cyclical factors.”

Part of the reason for the glut, of course, are high levels of production. Although gasoline production ebbs and flows seasonally, U.S. production has been on an upward trend in recent years. Instead of bouncing around in a range of 8.5 to 9.5 million barrels per day before 2014, U.S. production since the collapse of oil prices has steadily climbed to a range of 9 to 10 mb/d

U.S. gasoline demand plunged to just 8.2 million barrels per day in January, and sales were down 4 percent from a year earlier. It was also the lowest level in four years. Weak demand is raising some red flags for the market.

The glut of gasoline has led to tankers being turned away at New York Harbor in recent weeks, diverted to ports in the Caribbean. However, even that did not resolve the glut on the U.S. east coast. “Record-high inventories in the region are now pushing prices low enough to turn the typical trade flow on its head,” Bloomberg reports. The east coast typically imports a lot of crude oil and refined products. But refined products are instead heading in the other direction because of the buildup in supply.