Standard & Poor’s sets a stable outlook on the US Midstream Energy and Refining Industries in spite of lower price trends for NGLs and pipeline rates.
Read a bit more from the report:
“The U.S. midstream energy and refining sectors should continue to enjoy broadly stable credit outlooks for 2013 and 2014, despite some mixed underlying trends. Natural gas liquids (NGL) prices are trending down, while natural gas prices are persistently low (but generally stable), both of which are hurting certain midstream companies. At the same time, pipeline transportation rates in some areas of the country are decreasing as differences between regional prices remain minimal. However, many midstream companies continue to benefit from strong crude oil prices, adequate liquidity positions, and solid volume flows–especially in “wet” gas production areas that are rich in NGL.
For the U.S. petroleum refining and marketing sector, our 2013 outlook for business conditions and credit quality has weakened but is still generally stable, largely due to rising Canadian and U.S. crude oil production. The increased production had, until recently, fueled significant feedstock discounts (price differentials) and healthy refining margins. We believe the recent drop in differentials is unsustainable, primarily resulting from short-term events that have increased demand for light crude oil in Canada and the Mid-Continent. As these impacts subside and differentials widen, we expect financial performance for refiners will return to levels adequate for current ratings later this year. The events included disruptions at Canadian upgrading facilities, such as Suncor Energy’s Fort McMurray operations…”
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