June 16, 2012:

With the European sovereign-debt crisis worsening by the day, the market fears a fall in crude oil demand. Consequently, crude oil prices have dipped to their lowest in more than a year. Among the most popular pricing benchmarks, the West Texas Intermediate, or WTI, blend -- currently at a little more than $83 a barrel -- has hit an 18-month low. However, there's an industry that should benefit from falling oil prices: refining and marketing.

A struggle so far

Refining companies have been struggling with high input costs for the past few months, thanks to high hedged crude oil prices. Except for a few, such as HollyFrontier (NYS: HFC) , which took advantage of the Brent-WTI spread, most refiners without easy access to the cheaper WTI blend -- compared with the costlier Brent -- had been fighting a losing battle. For example, Valero Energy (NYS: VLO) had to shut down its Aruba refinery and realize a $611 million loss in asset impairment in the first quarter, leading to a $432 million net loss. Integrated oil and gas giant Chevron's (NYS: CVX) refining segment suffered similar losses in the fourth quarter of 2011.

A silver lining?

Now, however, things could be changing. With lower crude oil prices, refiners should see lower input costs -- which should result in higher margins. And unless some major supply disruption takes place, the eurozone crisis should keep prices from shooting up. Fellow Fool and energy editor Joel South says that impending events across Europe in the next few weeks could further affect international crude prices. Analysts at Credit Suisse are looking at a worst-case scenario of $50 a barrel. In other words, we could see crude prices dipping even further.

Last month, I wrote that a fall in demand for oil could become a reality, causing prices to tank. In addition, emerging economies such as China and India are expected to slow down, obviously putting the brakes on growth in oil demand.

The best prospects

Investors should especially keep an eye on the newly spun off Phillips 66 (NYS: PSX) , Marathon Petroleum (NYS: MPC) , and HollyFrontier. Phillips 66's advantage lies in its network of refineries spread across various locations in the United States. Accordingly, these refineries have the capacity to process all types of crude without exception. Marathon and HollyFrontier enjoy the strategic advantage of having their refineries located in the Midwest, with easy access to WTI crude because of the presence of the storage hub in Cushing, Okla. These two companies are arguably among the best positioned to take advantage of the Brent-WTI spread.

Foolish bottom line

Prospects for the refining industry are looking bright overall, and investors should keep a close watch on these companies. You can keep abreast of the situation by adding these companies to your free Watchlist.

By Daily Finance

June 16, 2012:

Gasoline strengthened in the Los Angeles and San Francisco Bay spot markets on Friday after a storage tank leak at a Phillips 66 refinery, traders said. June-delivery CARBOB gasoline strengthened 3 cents and was offered at 5 cents a gallon under July NYMEX RBOB gasoline in both California markets after Phillips reported a release at its 120,200 barrel-per-day (bpd) Rodeo, California, refinery. A Phillips spokesman said the leak from a storage tank caused a release of water used in the refining process. The water has a foul smell like rotten eggs. Refinery production was unaffected. In the Portland, Oregon, market, gasoline remained at 17 cents under July NYMEX RBOB gasoline. CARB diesel in Los Angeles rose 0.5 cent in a bid-offer spread of 3.5 cents/4.5 cents over July NYMEX heating oil. In the Bay market, CARB diesel was offered 0.5 cent over L.A. Portland market diesel rose 0.5 cent to 8.5 cents a gallon over July NYMEX heating oil. Jet fuel in Los Angeles traded down 0.5 cent at 7.5 cents a gallon over July NYMEX heating oil.

CARBOB and CARB diesel get their names from the California Air Resources Board, which mandates their formulas. CARBOB is a gasoline meant for use with ethanol. CARB diesel is intended to reduce pollution in California's major metropolitan areas. Outside California's cities, ultra-low sulfur diesel as authorized by the U.S. Environmental Protection Agency is used.

By Reuters

June 16, 2012

RODEO - Hazardous materials crews pumped hundreds of thousands of gallons of "sour water" from a ruptured tank at a Phillips 66 petroleum refinery in Rodeo on Saturday as they continued to clean up from a leak the day before. Health concerns were eased considerably by 3 p.m. Saturday, 18 hours after the tank released an unknown amount of hydrogen sulfide at the refinery located at 1380 San Pablo Ave. Hydrogen sulfide is not dangerous in low concentrations, but its offensive rotten-egg smell is strong and easily noticed, and can cause dizziness and nausea, said Randy Sawyer, the county's chief environmental health and hazardous materials officer. It's presence in water makes it "sour," said hazardous materials specialist Paul Andrews.

Andrews called the leak a "pressure event," at the two tanks. Tanks are designed to have a weak spot at the top, and this one failed the way it was designed, he said. The petroleum refinery, which Andrews said has existed for more than 100 years, makes gasoline, jet fuel and low sulfur diesel. The threshold for the gas becoming a health hazard is 30 parts per million, and the highest measurement in the area surrounding the refinery was 1 part per million, recorded around noon Friday, Sawyer said. By Saturday afternoon, the levels fell to 4 to 6 parts per billion, with the higher readings in the upper levels of Crockett, said hazardous materials specialist Devra Lewis. Crews laid down a blanket of firefighting foam in the tank, and a contractor will rivet and tape down a heavy chemical resistant tarp Saturday night, Andrews said.

The leak occurred about 7 a.m. Friday, when the tank ruptured. The cause of the rupture remains unknown, and the investigation likely won't be finished for weeks.

By Mercury News

June 16, 2012:

IRNA cited Mr Ali Reza Rahaie Chancellor of Amir Kabir University as saying that Iran will build a gas refinery, using domestic workforce, in cooperation with the National Iranian Gas Company, National Iranian Oil Company, Oil Industry Research Center, universities and entrepreneurs. Mr Rahaie said that the refinery will be one of the 40 macro projects that have been endorsed by related organs. Establishment of the refinery is of importance regarding the industry sector's growing need for energy. Earlier, Mr Mahmoud Zirakchianzadeh MD of the National Iranian Offshore Oil Company had said the biggest gas refinery in the Persian Gulf will become operational on the southern Iranian island of Qeshm next year.

Mr Zirakchianzadeh said that the Qeshm gas refinery would be able to process about 80 million cubic feet of gas per day and will become fully operational next year. The design, construction, installation, and commissioning stages of the project have been undertaken by domestic contractors and manufacturers. He said that the construction of the gas refinery on Qeshm Island has started in parallel with the development of Hengam oil field which is close to the island. Hengam oil field, which is shared with Oman, is currently producing more than 22,000 barrels of oil per day with the target output of 30,000 barrels per day.

By IRNA

June 16, 2012:

Landmark investment led by Citadel Capital, Egyptian, Gulf and international investors, global export credit agencies and development finance institutions will reduce current Egyptian diesel import needs by 50 per cent, improve air quality in the Greater Cairo Area, help reduce Egypt’s annual subsidy bill, result in more than $300 million in additional direct benefits to the state annually, and spur job creation.

By CPI Financial