The chief executive of Tesoro Corp. (TSO), the third-largest U.S. independent refiner by volume, told investors Wednesday that fuel demand will rebound.

"I'm starting to feel particularly bullish on demand," Chief Executive Bruce Smith said at Barclays CEO Energy and Power Conference in New York.

The San Antonio-based company operates several refineries on the West Coast, which, Smith said, felt the effects of the recession first.

However, Smith said that in the long term, refineries on the West Coast, particularly in California, are in a better position to survive the downturn.

Despite the fact that the downturn has dropped asset values, Smith said Tesoro isn't looking to make any acquisitions.

Analysts predict that the recession will result in the shuttering of marginal facilities accounting for up to 10% of the U.S.'s capacity to refine oil into fuel. Refineries located on the Gulf Coast and East Coast are especially vulnerable.

Smith said the fear about widespread closures is overstated. He also said such fear and uncertainty have been unfairly priced into Tesoro's stock. On Wednesday, shares of Tesoro were trading up 1.9% at $14.85.

The belief that any refinery with less than 100,000 barrels of capacity is at risk for closure is misguided, Smith said. The viewpoint fails to take into account that some small refiners have strong regional niches, he said.

However, Smith said he does think that small refiners on the Gulf Coast are at risk of closure.

"We think that winners and losers are going to be picked in the market place. We believe we are (in the right place)."

-By Susan Daker, Dow Jones Newswires; (713) 547-9208;