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What’s Marathon Petroleum’s Refining Earnings Outlook for Q2?

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Jun. 14 2019, Updated 8:41 a.m. ET

Marathon Petroleum’s refining earnings indicator

Let’s study the trend in Marathon Petroleum’s (MPC) refining earnings indicators.

Marathon Petroleum’s refining margin and earnings are affected by the blended crack, the sour differential, and the sweet differential. According to MPC, a dollar-per-barrel rise in the blended crack will expand its annual net income by $900 million, and a dollar-per-barrel shift in the sour differential and the sweet differential will alter its yearly net income by $450 million and $370 million, respectively.

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Marathon Petroleum’s refining margin indicators in the second quarter

In the current quarter, according to MPC, the blended crack has risen by $4.1 per barrel YoY (year-over-year) to $18.1 per barrel. However, the prompt sour differential has narrowed by $0.6 per barrel YoY to $2.6 per barrel in the quarter. The company processed 52% sour crude in its refineries in the first quarter. The prompt sweet differential has narrowed by $5.9 per barrel YoY in the second quarter.

Marathon Petroleum’s refining earnings indicators have shown a mixed trend. While MPC’s blended crack has risen, the company’s differentials have fallen, suggesting that its refining earnings could rise in the second quarter due to a higher blended crack partly offset by lower differentials.

It’s important to note, though, that these indicators now show data only for April and May. They’ll vary once the June data is published.

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