$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
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.