- One of the top drivers of refiners' outperformance of late has been the expectation that U.S. crude oil prices would fall relative to Brent crude, giving a boost to their profit margins; that view is now the consensus, and Credit Suisse thinks it might be priced into refiner stocks.
- The firm downgrades refiners is sees as most exposed - Delek US (DK), Western Refining (WNR) and Phillips 66 (PSX) - to Market Perform from Outperform on signs that oil prices could be stronger than the market expects.
- It cites five factors: Overall refining runs in the East of Rockies region are higher; crude inventories are lower; crude imports have fallen; maintenance likely will be down Y/Y; and a temporarily slower trajectory of domestic production growth may occur due to the normal winter impacts.
- ETFs: USO, OIL, UCO, SCO, DBO, DTO, CRUD, USL, DNO, UWTI, SZO, DWTI, OLO, OLEM, TWTI
at CNBC.com (Oct 28, 2014)