Edward Harrison

Oil Refiners as Proxy for Demand

Generally, I am bullish on the oil patch because I believe excess liquidity will go into asset prices, especially commodity markets. That's bullish for Upstream companies. But, if prices rise quickly that squeezes refiner margins. So, I couldn't say i think VLO or TSO are going to benefit.

I do believe we have a glut of sour heavy crude over sweet light and that means the fundamentals will eventually re-assert themselves in the refiners direction (not SUN because they are not leveraged to complex refining).

The key word is eventually, of course, because refiners likely won't run-up until then.


On Sep 09 08:50 AM J. Bruun wrote:

> Hi Edward,
>
> Thank you for the article.
>
> How does this translate into trading recommendations? When is it
> time to go long if you fundamentally believe that over then next
> year or two we will be far out of this long recession? What I'm thinking
> is that when the 2012 LEAPS come for e.g. VLO it will be time to
> buy out of the money calls.
>
> Jan