Crude oil refiners Sunoco (NYSE:SUN) and Western Refining (NYSE:WNR) reported earnings this morning before the market opened.  Sunoco posted diluted EPS of $4.70 on revenues $16.109 billion. Western reported diluted EPS of $1.61 on revenues of $3.165 billion. Analysts had estimated Sunoco’s EPS at $0.81 on revenues of $12.55 billion and Western’s EPS at $1.21. There are no estimates on Western’s third quarter revenues, but in the year-ago quarter, revenues reached $2.23 billion.

Sunoco’s impressive results stemmed from lower prices for crude oil andreduced refinery production related to the Gulf hurricanes. The companyalso reduced its reliance on Nigerian crude and increased production ofdistillate early in the quarter, when gasoline margins were low.

Western’s comments echoed those from Sunoco, at least regarding lower crude prices and the impact of Hurricanes Gustav and Ike.

For the current quarter, Western sees gasoline demand increasing aspump prices remain low. The company is also evaluating "strategicalternatives for specific assets", which means it is looking to sell arefinery.

Sunoco has canceled its plan to upgrade its Tulsa refinery and islooking for a buyer for the plant. The company sees the slower economydampening demand for gasoline, even though pump prices have fallenbelow $2/gallon in some areas.

There has been recent evidence that falling pump prices are drivingconsumers back into their old consumption habits. But low pump pricesand low crude prices won’t last forever. That’swhy refiners are looking to sell assets. It’s like they don’t want tobe in the refining business either.

Sunoco was up about 4.5% right before the open, but shares just went into the red. Western is soaring with shares up a whopping 16% at $8.44, but that is still down about 75% from its highs..

Paul Ausick
November 6, 2008

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