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Refiners $WNR & $ALJ are literally on FIRE hitting Sweet spot in margins

|Includes:ALJ, ATPAQ, BP, CEO, COP, CVX, ESV, FOR, FTO, GEOI, HK, MRO, PTR, SGY, STO, TSO, Valero Energy Corporation (VLO), WNR, XOM

$VLO eps for June Qtr for example is now at .84 eps est., and nearly $3 EPS
on forward basis estimate: others to watch: $WNR $ALJ $FTO

If any of you remember, when refiners go in a sweet spot their profits surge and so do their stock prices in the last Sweet Spot, VLO hit $70's.

Today refiners are heavily shorted and a small increase in buying pressure can cause a panic short squeeze among the millions of shares that are short shares of  the refiner sector.

Shares short as of Jan. 14th 2011

(NYSE:VLO) 16.41 Million shares

(NYSE:FTO)  8.26 Million shares

(NYSE:WNR) 6.90 Million shares

(NYSE:ALJ)    1.56 Million shares

Refinery margins
Refining margins are proxied by the 321 crack spread which measures the income generated by the refining product minus the cost of the oil input.

3 barrels of crude are supposed to generate 2 barrels of gasoline and 1 barrel of heating oil.

The spread has reached a high level.

This should entice refineries to increase their production of gasoline or heating oil.




Stocks: VLO, WNR, ALJ, FTO, TSO, HK, ESV, MRO, BP, XOM, COP, CVX, PTR, CEO, STO, GEOI, FOR, ATPAQ, SGY