- 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 (NYSE:DK), Western Refining (NYSE:WNR) and Phillips 66 (NYSE: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.
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