Time to buy refiners, especially Valero, Barclays believes

Pain for investors in refiners such as Valero (VLO), Tesoro (TSO), Phillips 66 (PSX), HollyFrontier (HFC) and Marathon Petroleum (MPC) may be ready to turn into gain, Barclays says as it sees the U.S. refining segment among the market’s best-performing groups over the next year or two.

The firm thinks the narrow LLS-Brent differential during the past two months mostly has been due to poor weather affecting both production and the logistics necessary to transport the production to refineries.

Barclays believes investors should overweight the entire U.S. refining industry, but particularly favors VLO, which is "best positioned to take advantage of the changing Gulf Coast crude oil landscape,” and TSO, when “investors start to shift their focus to relative underperformers within the refining sector.”

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Comments (7)
  • redarrow5150
    , contributor
    Comments (1374) | Send Message
    I bought some more PSX today. This sector is grossly undervalued along with the major oils.
    17 Mar 2014, 09:31 PM Reply Like
  • Michael Fitzsimmons
    , contributor
    Comments (11143) | Send Message
    Heh heh - what pain is Barkley's talking about for investors in PSX? The stock is near all time highs and breached $80 for the first time the other day. That's the kind of pain I like.


    As I have been saying for quite some time now, PSX is one of the best long-term investments in "Shale USA":


    17 Mar 2014, 10:54 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2863) | Send Message
    Yea I was gunna say what pain is there in refinery names? VLO has been great for me
    17 Mar 2014, 11:57 PM Reply Like
  • financeminister
    , contributor
    Comments (1218) | Send Message
    Same thing I was thinking about...what the heck are they talking about? then it hit me that these guys think only short term...a month to three months at best and are generally playing the traders. PSX has been having some good stock price momentum in the last 200 days. If this is pain, can't wait for the "pain" to get over :-)
    18 Mar 2014, 08:53 AM Reply Like
  • aow
    , contributor
    Comments (151) | Send Message
    I reckon they were (in a short-sighted manner) referring to the hit refiners (particularly VLO) took after the Crimean crisis began. Pretty much all the names have made up for that drop so the pain was clearly short lived (and not too different from that experienced by the rest of the market).
    18 Mar 2014, 03:44 PM Reply Like
  • glf4mny
    , contributor
    Comments (464) | Send Message
    Is there anyone that doesn't know to buy into downstream in March/April when it is at seasonal lows, just before the summer driving season. And sell it in mid August.
    18 Mar 2014, 01:13 AM Reply Like
  • jpmclane
    , contributor
    Comment (1) | Send Message
    The "pain" is from the last collapse in refinery prices in 2007-2008, the highs of which have still to be reached in Valero.
    18 Mar 2014, 05:26 PM Reply Like
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