Mubasher: Moody's outlook for the refining and marketing industry in North America and Europe, as well as the Middle East and Africa remains negative, the rating agency said in a new report issued on Monday.

A negative outlook indicates that business conditions are expected to worsen during that time frame, the report indicated.

"The earnings of North American and European refiners will decline through next year as a result of slowing demand growth for gasoline, diesel and distillates," said Moody's analyst, adding that “fuel inventories will remain above historical averages, further constraining margins.”

Refiners and in particular, those located along the east coast will pause operations for maintenance, helping to reduce capacity utilization, though the reduction won't be uniform.

Already-stressed US refiners will also increasingly look for ways to avoid the escalating costs of government-mandated renewable fuel credits, or renewable identification numbers, which could also squeeze margins next year, the report indicated.

Meanwhile, in Europe capacity cuts will proceed, though slowly, the report said, adding that increased availability of cheap crude from Russia, Iran and Iraq will hinder the process, as will local political, labor and environmental incentives, according to Moody’s.