[THE INVESTOR] South Korean refiners may see better earnings than expected for the third quarter on the back of rebounded refining margins in August, according to industry sources on Sept. 27.

The benchmark Singapore complex gross refining margin hovered above US$7 per barrel this month, sharply up from US$3.9 in August, according to the sources. Singapore is the regional trading hub of the benchmark Dubai crude.

The margin is the difference between the total value of petroleum products from oil refineries, and the cost of crude and related services, including transportation.

The August reading of below US$4 per barrel falls short of the break-even point for the domestic oil refining industry. Usually, a South Korean refiner can generate a profit with a refining margin of more than US$4.50.

Rebounding cracking margins are expected to help local refiners log better-than-expected third-quarter earnings. A recent improvement in the refining margin came from a decline in oil stockpiles in the US, and in the operations of Chinese and US refiners.

(theinvestor@heraldcorp.com)