Refining Stocks Fall On 2Q Worries, Cash Concerns

DEBORAH JIAN LEE

NEW YORK (AP) — Shares of refining companies tumbled on Wednesday, after refiners warned of bleak second-quarter results and signaled financing troubles by offering millions in common stock and senior notes.

The sector reversed gains from last week's rally, despite news that utilization rose more than expected. The Energy Department's Energy Information Administration on Wednesday reported that U.S. refineries ran at 86.3 percent of total capacity on average, an increase of 1.2 percent from the prior week. Analysts expected capacity to rise to 85.7 percent.

The price of crude oil fell $1.38, or 2 percent, to $67.14 in midday trading. Crude prices have climbed steadily for several weeks, but demand for gasoline remains weak, a troubling combination for refiners who must now shell out more for higher-priced crude while so many consumers keep their cars parked.

Demand for gasoline over the four weeks ended May 29 was 0.4 percent lower than a year earlier, averaging about 9.2 million barrels a day, according to the EIA report.

Shares of Valero Energy Corp., the nation's largest independent oil refiner, sank $4.03, or 18 percent, to $18.36 in afternoon trading, a day after the company warned of a second-quarter loss, and said it plans to sell more than 40 million shares of common stock in a public offering.