Caltex Australia (ASX:CTX) showed improved margins in its Refiner Margin Update released to the ASX on Monday. Its associated refining business benefitted from falling oil prices in the March quarter. While it closed its refinery in Sydney last year, its Brisbane refinery in Lytton showed massive improvements thanks to falling oil prices. The Brisbane refinery’s margins are the difference in the costs of importing a basket of products to Australia and the costs of importing the crude oil required to make that product basket. The company’s refining margins increased from $5.31 per barrel in February to $20.66 per barrel in March, a 289 per cent improvement. It almost doubled the $10.50 per barrel from March 2014. Its realised CRM sales increased from US8.78 per BBL to US$15.65 per BBL, a 78.2 per cent increase.
Last month, Chevron announced it would sell its entire $4.70bn (US$3.70bn) stake in Caltex, citing high costs margins as the reason for the pull out. One month later, the Australian refiner showed significant improvements to its margins. Lower oil prices were cited as the cause for improved margins, although lower oil prices do not always translate into lower fuel prices. Supply forces and demand play a significant role in both oil and fuel prices. The improved margins were released during a period of speculation that Caltex would close its Lytton refinery while also closing its Kurnell refinery. Shares of CTX are up 31c, or .87 per cent, at $35.81 per share around 3:10pm on Monday. CTX has advanced over 58 per cent in the last 12 months and over 4.50 per cent so far this year.