There’s been persistent talk of dividend-cutting at big oil companies, particularly in Europe, despite seemingly healthy economic activity.
Now Fitch is sounding the alarm:
Research Recap: Fitch Ratings says Europe’s oil refining sector is experiencing considerable cash flow pressure due to a cyclical trough, particularly with regards to depressed refining margins and low refinery utilisation rates.
Fitch expects 2009 to be one of the weakest years in the past 10 years for operating cash flows for European refiners.
The agency’s outlook for the refining sector is negative due to the cyclical industry’s significant near- to medium-term challenges, Fitch said in a new report.
Fitch believes the current environment, which has affected refining in Europe, the US and Asia due to a combination of depressed demand and a glut of global refining capacity, is increasingly challenging as unlike upstream exploration and production (E&P) activity, which has seen a modest recovery of the oil price since Q209, conditions for refiners worsened considerably in H209 and there are no signs of a recovery yet.
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