Tough times ahead for U.S. refiners

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NEW YORK, June 25 (UPI) -- Weak market fundamentals and inflated crude oil prices could translate to plant closures for U.S. oil refiners, economic analysts say.

Fadel Gheit, an analyst at the Oppenheimer investment giant, said refiners face a bleak year "due to a deteriorating industry outlook of low margins caused by high oil prices and weak demand."

He downgraded U.S. refiners Sunoco, Valero and others, saying the U.S. refinery sector faces tough times for the foreseeable future, the Platts new service reports.

"Most refiners have already written off any recovery this year, but hope for an improvement next year," he said.

He said gasoline demand for 2009 has most likely peaked while refiners are hurt by what he said were "inflated" crude prices.

OPEC and the European Union meet in Vienna on Tuesday to examine progress made on efforts to control oil prices. Oil passed $147 per barrel in 2008 in the prelude to the global economic recession before settling at around $50 in the early half of 2009.

Analysts say the recovery toward $70 per barrel, however, defies market logic as the global economy lingers in recession and governments record huge crude stockpiles.