HOUSTON - Big Oil executives this week saw little prospect of a near-term improvement in refinery profits after Chevron ( CVX ), Exxon Mobil ( XOM ) and Shell all reported fourth-quarter earnings that were hit hard by a downturn in the margins for producing fuel.

An increase in global refining capacity in 2024, combined with sputtering demand growth has hurt refining margins.

Chevron's ( CVX ) shares declined 4% after it reported a loss in its refining business for the first time since 2020, causing the No. 2 U.S. oil producer to miss Wall Street's profit estimate.

 "This trend we have seen of margins softening through 2024 is something you can expect to continue to see, to extend into 2025," Chevron ( CVX ) CEO Mike Wirth said in an interview.

"It was a weak fourth-quarter, there's no doubt about it," he said on a post-earnings conference call in response to a question from an analyst about the refining downturn.

"I'm not going to call it a perfect storm, but it was a quarter in which everything went one way and it was negative."

Wirth said Chevron ( CVX ) would focus on what it can control in order to bounce back, including lighter scheduled maintenance for refineries over the next year.

Exxon Mobil's ( XOM ) shares fell 2.5% after it reported a 75% plunge in adjusted earnings from refining compared with the third quarter. The broader S&P 500 Energy Sector index was down 2.8% on Friday.

The refining business remains under pressure from additional fuel supply entering the market after new refineries opened in different countries around the world, said Exxon's Chief Financial Officer Kathryn Mikells in an interview.

"That's really what we're watching as we look ahead to 2025," she said.

The No. 1 U.S. oil producer still beat profit estimates with higher production from the Permian basin, the top U.S. oilfield, and Guyana, the latest oil hotspot.

UK-based Shell said on Thursday that while it had no plans to exit the refining business, it did not plan to expand either.

The company's fourth-quarter earnings nearly halved from the previous year to $3.66 billion, partly due to weaker refining margins.

Shell sold its refining and chemicals hub in Singapore last year and plans to shut down another plant in Wesseling, Germany.

HIT TO INDEPENDENT REFINERS

While higher oil and gas production helped cushion oil majors from the impact of lower refining profits, the pure-play refiners took a hit as fuel demand faltered in the U.S. and China, the two largest oil consumers.

Phillips 66's fourth quarter profit plummeted to $8 million from $1.26 billion in the year-ago quarter. Valero's refining profit dropped 73% in the fourth quarter. 

Two U.S. refineries are set to close this year and limited capacity additions beyond 2025 will help support refining margins over the long term, said Valero CEO Lane Riggs on Thursday.

Investors were also worried about U.S. President Donald Trump's threats to impose tariffs on crude imports from Canada and Mexico on Feb. 1, which could raise costs for U.S. refiners.

French oil major TotalEnergies will report fourth quarter results on Feb. 5 and British oil producer BP reports on Feb. 11. 

BP has warned that a drop in refining margins and the impact of turnaround and maintenance activity would result in an up to $300 million decrease in profit quarter-on-quarter.