June 13, 2012:

Delta Airlines (DAL.N) is set to close its landmark deal to buy the Trainer, Pennsylvania, refinery on time later this month, allowing it to begin a long-delayed maintenance overhaul in early July, sources said on Tuesday. Delta will take possession of the 185,000 refinery from Phillips 66 (PSX.N) on June 22, according to sources familiar with the situation. Workers are expected to return to work the week of June 25, after the transfer of assets. A plant-wide turnaround lasting 40 to 50 days is expected to begin after July 4, allowing the idled plant to resume producing fuel, one source said. The major maintenance, which is required every five years, was originally due in the spring of 2011, but had been deferred until the plant was shut later that year.

A Phillips 66 spokesman said the deal would close before the end of June. When the $180 million deal was announced in late April, Delta had said it wanted to close the transaction in the first half and begin producing fuel during the third quarter. It also said it expected to reconfigure parts of the refinery in order to maximizes jet fuel production, a process that should also be complete by the end of the third quarter. A spokesman for Delta declined to comment. About 175 out of the 220 hourly workers are expected to return to the plant, with the remainder either retiring, transferring or getting other employment.

The Trainer refinery's gradual progress toward resuming production threatens to put new pressure on the Atlantic Basin refinery profit margins, which have risen after years in the doldrums following a wave of shut-downs that purged excess capacity. Trainer has been idle since September 2011, one of a handful of aging refineries on the U.S. East Coast, Caribbean and in Europe that had been battered by diminishing fuel demand, costly imported crude and growing foreign competition.

But a number of those plants are now being reopened under new ownership, risking a new decline in margins. Delta Airlines' deal for Trainer is the first time an airline has looked to hedge its fuel costs by buying a refinery, a move it said would allow it to save $300 million annually on its jet fuel bill, which reached $12 billion last year. Delta will not deal with trading. Oil major BP (BP.L) will supply crude to the plant, while BP and Phillips 66 will get a share of the gasoline, diesel and refined fuel to sell, in exchange for supplying Delta with jet fuel in other locations.

By Reuters

June 13, 2012:

Shares in refiners fell, led by the biggest Thai Oil Pcl and PTT Global Chemical Pcl, on concerns over the impact of falling oil prices on their earnings for the April-June quarter. Thai Oil shares fell 3.3 percent to 59.5 baht while PTT Global shares dropped 3.4 percent to 57.25 baht, underperforming the energy subindex and the broader stock market , which were down 1 percent and 0.2 percent respectively. "In the second quarter, refinery sector earnings are likely to be dragged down by a sharp fall in oil prices. Monthly average Dubai crude oil prices have kept falling every month since end-March," broker Phillip Securities said in a report. The broker, which rated refiners at 'neutral', said the weakening earnings outlook had already been priced in by the market. 12:01 STOCKS NEWS THAILAND: Banks up on rate outlook, loan demand Banking stocks gained as much as 1.2 percent to a nearly one-month high on expectations the central bank would keep policy interest rates unchanged in a review later in the day, led by rallies of more than 2 percent by Kasikornbank Pcl KBAN.BK. The banking subindex .SETB was up 0.3 percent at 442.29, climbing at one point to 446.21, its highest level since May 17. Shares in Kasikornbank, which are expected to outperform industry fuelled by demand for large loans, rose 1.6 percent, having hit a high of 159.5 baht. The Bank of Thailand is expected to leave interest rates unchanged for a third consecutive meeting on Wednesday and perhaps all year, to help the economy recover from last year's floods.The rate decision is due around 0730 GMT. (Full Story) "We expect MPC to keep rate at 3 percent ... It should be positive in helping ease interest cost of commercial banks now that they are raising funds via deposits to meet rising demand for loans," said broker Kiatnakin Securities in a report. The broker said it had an 'overweight' rating on banking shares. Kasikornbank was among its top picks, with a target price of 175 baht.

By Reuters

June 13, 2012:

A small fire near a loading dock at the Total Petrochemicals 232,000 barrel-per-day Port Arthur, Texas refinery early Wednesday was doused in 15 minutes and had no apparent effect on operations, the fire department said. Company spokesman Tim Coffy termed the fire "non-operational" with no offsite impact. "Since the equipment was near a loading dock, there were no production units affected," Troy Irvine, public information officer at the Port Arthur fire department, said in an email. A bulldozer in the loading dock area was on fire when firefighters arrived and the cause appeared to be fuel leaking from a fuel line, Irvine said. The fire began about 3:20 a.m. local time Wednesday, according to a message on a community line.

The community line message did not identify any unit, but said there were no injuries to the plant's workers. The refinery produces transportation fuels, petcoke, aromatics and liquefied petroleum gas and ships most of its product east of the Rockies, according to its website.

By Reuters

June 13, 2012:

LONDON--Global demand for crude from refineries is set to jump seasonally by 2.8 million barrels a day between April's low and August as maintenance season ends and demand for refined products recovers from extreme lows seen over the four quarters to the end of March, the International Energy Agency said in its monthly oil market report Wednesday. "New capacity in China and India, as well as the restart of some Petroplus plants in Europe, will also contribute to higher runs," the Paris-based energy watchdog said. Gasoline is seen as the biggest contributor to refined products demand recovery, said Matt Parry, a senior IEA oil market analyst.

"Gasoline demand went from falling in year-on-year terms to predicted modest gains in 2012," he said. "Jet and fuel oil have also demonstrated muted signs of picking up after heavy falls in 2011." "Regionally, OECD Pacific and Africa led the uptick," Mr Parry said, referring to the Organization for Economic Cooperation and Development. The IEA expects global runs--or the amount of crude refiners process into oil products--to average 74.3 million barrels a day in the second quarter, up 390,000 barrels a day on the year, and 75.9 million barrels a day in the third quarter, up 345,000 barrels a day on the year.

"Despite generally worsening refining economics, global crude runs are assessed 585,000 barrels a day higher in May compared with April, at 74.1 million barrels," the watchdog said, adding that most of the increase came from the U.S. Throughputs are expected to reach a seasonal peak of 76.3 million barrels a day in August, the IEA said. "[However] the continued ramp-up of runs at new capacity in Asia, and the resumption of operations at four of Petroplus's five European refineries over coming months, could again put further downward pressure on [profit] margins and force economic run cuts if oil product demand growth disappoints," the IEA said.

Swiss-based Petroplus Holdings AG (PEPFY), once Europe's largest independent refiner, lost access to all its credit lines and then filed for insolvency in January. Three of its refineries have been bought by commodity trading houses and the Petit Couronne refinery in France is set to restart at reduced rates on 14 June thanks to a tolling deal. Refinery runs in China, the world's second-largest oil consumer, rose in May slower than expected as refinery maintenance remained high, the IEA said.

"While lower recent international crude prices have improved economics for domestic refiners, companies have said that they were still operating at a loss," the watchdog said. But Chinese refinery runs are expected to increase from June, as maintenance winds down and also as new capacity is ramping up, said Toril Bosoni, a senior IEA oil market analyst. "With sharply falling crude prices, there is the opportunity to improve margins further by delaying or adjusting product prices [down] by less," she said.

"Our underlying assumptions are that Chinese demand growth will pick up from the low levels seen in the last few months," Ms Bosoni added. The watchdog expects global oil demand in 2012 to grow 820,000 barrels a day from 2011, to 89.9 million barrels a day.

By Dow Jones Newswires

LONDON - Oil rose on Wednesday on the back of strong gasoline draws and higher refinery utilization rates in the United States, but gains remain capped by weak economic data and a well supplied physical market. U.S. gasoline and distillate stocks drew down last week against expectations of a build. Gasoline inventories slumped 1.72 million barrels in the week, more than analysts' expectations for a 1.1-million barrel build. Meanwhile, refinery rates surged to their highest in nearly five years, while crude inventories slipped last week, much less than forecast.

"Brent is rising with sharply lower gasoline stocks at the start of the driving season," said Eugene Weinberg at Commerzbank. "Refinery utilization is also at its highest in five years, which is bullish news, as it will translate into increasing crude consumption." Brent crude rose 64 cents to $97.78 a barrel by 1523 GMT. It had slipped to as low as $96.67 earlier in the session. U.S. crude rebounded, rising 32 cents to $83.64 per barrel, having been as low as $82.15. Data on Wednesday showed U.S. retail sales fell for a second straight month in May reigniting fears about the health of the world's largest economy.

The euro extended gains against the dollar, further supporting oil prices, to hit a global session high as investors pared hefty bearish positions and as U.S. stocks turned positive.

OPEC and IEA

Investors are also watching for any change in the Organization of the Petroleum Exporting Countries' output policy at its meeting in Vienna, with price hawks calling on Saudi Arabia to rein in excess production. OPEC and the U.S. government agreed on Tuesday that global oil markets could weaken further in the second half of the year, with prospects for demand dimming.

Brent has fallen from a peak of more than $128 a barrel in March, prompting calls from exporters such as Venezuela to stem a slide that has knocked $30 a barrel off prices. Saudi Arabia has lifted output to 10 million barrels a day, its highest in decades, to help nurse global economic growth in what Saudi Oil Minister Ali al-Naimi has called a "type of stimulus" for the economy. The International Energy Agency, which advises 28 countries on energy security, warned against calling the market over-supplied, pointing out Iran's oil exports have fallen by an estimated 40 percent since the start of the year as Western sanctions tear into its oil industry.

The IEA report was seen as effectively calling on OPEC to maintain current high oil output levels to help ailing Western economies struggling with high energy prices. "The IEA confirmed that there are stock builds and they don't want to say that the market is over-supplied, but it's not a game-changer in terms of prices. and the market is still well-supplied," Olivier Jakob at Petromatrix in Zug said.

EURO ZONE

He added that a focus on Greek parliamentary elections at the weekend was likely to drive further volatility. The elections, which may determine whether the country stays in the euro zone, are weighing on crude prices, because further chaos in the single currency region may affect global demand for oil. Raising the stakes further, the UK's finance minister said Europe may need to sacrifice Greece's membership in its single currency bloc, and Austria's finance minister said Italy might need a financial rescue because of its high borrowing costs. While the Austrian comment drew a sharp denial from Italy, it stoked fears that Europe is far from ending 2-1/2 years of turmoil.

By Reuters