U.S. refiners' profit expectations improve, and the cost advantage of purchasing heavy crude oil will become more apparent in the second half.

Jin10 data reported on August 8th that data shows a key driver of profitability for U.S. refiners— the ability to purchase heavy crude oil at low prices— is expected to improve in the second half of this year, as production from Canada and the Middle East gradually rebounds. In addition to demand for core fuel products, refiners also need cost-effective raw materials. Many refiners, especially those along the Gulf Coast, have retrofitted their plants to process more discounted heavy crude oil or to switch more easily between light and heavy crude oil. This shift has made the price differential between these two types of crude oil a closely watched metric for measuring refiner profitability. Marathon Petroleum’s Chief Commercial Officer Rick Hessling stated in this week’s conference call, “We expect the (price differential between heavy and light crude oil) to widen in the second half of this year.” An unexpected source of heavy crude oil returning to the market is California. Drill operators in the state say recent regulatory adjustments by Democratic Governor Gavin Newsom may revive oil drilling activities.