Outlook Remains Favorable for Refiners; Cash Returns Set to Increase on Improved Balance Sheets

Second-quarter refining results produced a round of record profits after margins soared during the quarter. Although that will probably prove a peak as margins have since softened on concerns about weakening demand, they remain at relatively high levels, implying that strong, above-midcycle profits will continue. Refiners have been focused on reducing debt to prepandemic levels and have largely done so, thanks to the strong market. As such, we expect shareholder returns to increase in the second half of the year and stay robust into 2023 as the refining market remains strong.