Refiners slide sharply lower after U.S. widens oil export potential


Refiners take a beating in early trading, as a lift of the ban on U.S. oil exports is expected to narrow the WTI-Brent spread, which could cause refiners' profits drop if they are forced to pay higher prices to compete with international buyers for U.S. crude.

“We don’t think the current system needs to be changed,” Valero Energy tells Bloomberg.

Yesterday's rulings gave Pioneer Natural Resources (PXD +2.6%) and Enterprise Products Partners (EPD +1.4%) permission to ship ultralight oil to foreign buyers - a narrow ruling, but one that is likely to spark similar requests from other companies, and increase lobbying for a full lifting of the 40-year-old ban on exporting crude oil.

Refining stocks are broadly lower: VLO -7.4%, PBF -5.8%, MPC -5.7%, WNR -5.5%, DK -5.4%, HFC -4.6%, ALDW -4.6%, TSO -3.8%, NTI -3.5%, PSX -2.9%, ALJ -2.7%, CVI -2.3%.

From other sites
Comments (35)
  • jdadyfinance
    , contributor
    Comments (238) | Send Message
     
    Crude oil has not been approved for export. Lightly refined condensate the key word here being refined. Selloff in refiners is a buying opportunity, we are not going to be exporting crude oil ant time soon.
    25 Jun 2014, 10:21 AM Reply Like
  • Douglas E. Johnston
    , contributor
    Comments (1773) | Send Message
     
    condensate is a "crude" - its just light viscosity...it use to be called (natural) gasoline as u can stick it right in the tank (although with backfires)....it's what comes out of a lot of shale plays as the thicker stuff can be tricky....and it can be mixed with heavies/sours to "make" crude...its actually quite prized since it can be easily refined into gas, ...
    25 Jun 2014, 01:55 PM Reply Like
  • PalmDesertRat
    , contributor
    Comments (3766) | Send Message
     
    I suppose all the US refiners are going to go out of business now.

     

    I bot some MPC this morning at 79.46, will add more if it drops more
    25 Jun 2014, 10:29 AM Reply Like
  • aeroguy48
    , contributor
    Comments (899) | Send Message
     
    Amazing how the luddites have screamed exporting oil will make prices go higher, but WTI and Brent are now down.
    25 Jun 2014, 10:33 AM Reply Like
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    this is an interesting point actually.

     

    this has not been legislatively either...so there is a question as to the constitutionality of the rule. yet somehow it does "reak of desperation" actually...that somehow the existence of all electric vehicles, super capacitors and now a rather dramatic collapse in economic growth will be "solved" by this.

     

    the fact is at the margin the "energy crisis" has been purely fabricated by the two party political system and their "take out" of oil production in order keeps prices absurdly high in the hopes that "that will pay for everything."

     

    instead the economy has intervened and entire Cities and States are on the verge of complete bankruptcy because of these desperate...and completely unnecessary...measures.

     

    in short "we have an energy glut" but the only ones not allowed to take advantage of this fact are the American people.
    25 Jun 2014, 03:26 PM Reply Like
  • DougRk
    , contributor
    Comments (1899) | Send Message
     
    @aero, I think those claiming prices would go higher are referring to inland-sourced US oil prices, not WTI and Brent?
    25 Jun 2014, 03:59 PM Reply Like
  • DougRk
    , contributor
    Comments (1899) | Send Message
     
    @omar, I don't know what to think of this. Do you really believe the American people haven't benefited from the glut? Ask the booming oil states, the workers who moved there, the families living off the enormous paychecks, the investors/mutual funds in Bakken plays, on and on.

     

    Likewise, your argument that an energy crises is two party doesn't make sense. One party, the Dems, prefer higher energy costs/reduced energy supply to bolster their false claims that solar and other green energy is the way to go. The Repubs generally have favored unleashing energy sources of all types to keep costs down. You find one Repub making statements or introducing bills to cap energy sources and I'll eat my shoes. And no, refusing to dole out tax money to green energy sources isn't capping energy.
    25 Jun 2014, 04:05 PM Reply Like
  • dundey
    , contributor
    Comments (986) | Send Message
     
    You are correct dsr. There is not a "glut". At best the US will not be oil self sufficient until 2020. At best.

     

    I actually view this as a good thing for the oil stocks long term. As we continue to produce more oil / natural gas, sure crude prices could come down short term. But having other economies (export) to sell to is a good thing for the companies AND for the country.

     

    I applaud the move.
    26 Jun 2014, 06:38 PM Reply Like
  • mapodga
    , contributor
    Comments (7361) | Send Message
     
    US can't export oil. It is one off the biggest importer on the world.

     

    This is false alarm. Anyway good to buy this things now.
    25 Jun 2014, 10:44 AM Reply Like
  • Mike Maher
    , contributor
    Comments (2862) | Send Message
     
    The US would export light sweet crude and import the heavier stuff, since more of our refineries are set up to refine heavier oils. What will likely happen is that the refiners will spend some money to upgrade their facilities to be able to change the condensate enough that it can be exported, and they will begin exporting the condensate, as well as the typical refined products. This is a total over-reaction - these stocks should be down 3-4%, not 7-9%.
    25 Jun 2014, 11:19 AM Reply Like
  • PalmDesertRat
    , contributor
    Comments (3766) | Send Message
     
    They can export to Japan and import from Mexico, saving on transportation. Now they can''t.
    25 Jun 2014, 01:27 PM Reply Like
  • Douglas E. Johnston
    , contributor
    Comments (1773) | Send Message
     
    condensate can be simply split from the gasses directly near the well head so it should benefit the gatherers...its the more expensive/complex refining that becomes unneeded. still might be an over reaction but they were ready for the seasonal slump soon anyway
    25 Jun 2014, 01:58 PM Reply Like
  • DougRk
    , contributor
    Comments (1899) | Send Message
     
    @mapo, this has nothing to do with total import/export numbers, as your comment implies. It has to do with market efficiency, shipping cost, and refinery capability. This will indeed drive up US-sourced oil prices at the cost to refiners, who have been reaping nice profits from the stranded glut of US inland oil production.

     

    This is a boon to mid-level oil producers operating in the inland.
    25 Jun 2014, 02:53 PM Reply Like
  • mooseye
    , contributor
    Comments (71) | Send Message
     
    Off topic kind of, but I love the way "joe market" now controls the market with kneejerk reactions to non-events rather than the actual supply and demand system we used to pray to.
    25 Jun 2014, 11:17 AM Reply Like
  • DougRk
    , contributor
    Comments (1899) | Send Message
     
    @moon, but what is "joe market" reacting to? Anticipated supply and demand. Which means, supply and demand is still in control. Your soundbite sounds clever and accurate, but it isn't.
    25 Jun 2014, 02:55 PM Reply Like
  • mooseye
    , contributor
    Comments (71) | Send Message
     
    I believe one may anticipate anything one pleases. Joe still remains uninformed.
    26 Jun 2014, 09:42 AM Reply Like
  • Robin Hewitt
    , contributor
    Comments (5473) | Send Message
     
    I sold on the news. Puts, that is :-)
    25 Jun 2014, 11:17 AM Reply Like
  • Hamdy Sadek
    , contributor
    Comments (221) | Send Message
     
    Added more VLO shares to my position. This is a great opportunity, you got to love this market.
    25 Jun 2014, 12:44 PM Reply Like
  • sethmcs
    , contributor
    Comments (3547) | Send Message
     
    There are bigger problems here. If Iraq oil stops. It is oil shock time and refiners do poorly in oil shocks. Margins disappear but leverage doesn't.
    25 Jun 2014, 01:27 PM Reply Like
  • mapodga
    , contributor
    Comments (7361) | Send Message
     
    They are in the middle. If oil goes up, also their price go up, if contract were done in normal way.
    25 Jun 2014, 01:52 PM Reply Like
  • Ed Invests
    , contributor
    Comments (83) | Send Message
     
    Another article said that the loss of refineries in Iraq would drive up the price of gasoline everywhere and that would improve refinery margins.
    25 Jun 2014, 02:32 PM Reply Like
  • 11146471
    , contributor
    Comments (1358) | Send Message
     
    In that case buy oil tankers (Crude carriers) and non-US refiners (European probably)
    25 Jun 2014, 01:57 PM Reply Like
  • C Michael Croston
    , contributor
    Comments (203) | Send Message
     
    Refiners are a huge BUY!!! $VLO $PSX $TSO $MPC $HFC ... It takes an act of congress to lift the ban. Good luck with that! http://on.wsj.com/1rz5XR4
    25 Jun 2014, 02:11 PM Reply Like
  • rlaakso
    , contributor
    Comments (125) | Send Message
     
    The link does not work for me.
    25 Jun 2014, 02:17 PM Reply Like
  • Midas1
    , contributor
    Comments (120) | Send Message
     
    Ditto--didn't work for me either.
    25 Jun 2014, 02:28 PM Reply Like
  • DougRk
    , contributor
    Comments (1899) | Send Message
     
    @C Mike, this is a very good counter argument. Do any of us really believe this will get through Congress? Can any politician in an election year argue to voters that it's a good idea to export oil and drive our prices up? Can any Republican afford to look like he's supporting oil producers making more money while the Dems demagogue the issue, no matter that Dem policies have wreaked the havoc in oil prices we see now? I think not on all counts.
    25 Jun 2014, 02:57 PM Reply Like
  • nodhannum
    , contributor
    Comments (32) | Send Message
     
    @C Michael...and since when does maximum leader worry about congress or any laws. It is or will by decree.
    25 Jun 2014, 03:20 PM Reply Like
  • CaptRichie
    , contributor
    Comments (26) | Send Message
     
    Maybe I'm missing something but can't the refiners pass along the higher cost of crude to their retail customers? The US may still import a little oil but I suspect our gasoline is all domestic product. What's the big deal here?
    25 Jun 2014, 07:09 PM Reply Like
  • jdadyfinance
    , contributor
    Comments (238) | Send Message
     
    Condensate is minimally refined to remove some of the unstable elements for shipping. Thus it is not crude period, and that is how it gets around the rule. If there is a new avenue for this refined product I am confident the major refiners will find a way to participate.
    25 Jun 2014, 07:56 PM Reply Like
  • Douglas E. Johnston
    , contributor
    Comments (1773) | Send Message
     
    the only difference btw "crude" and "condensate" is API. < 45 is considered crude; > 45 condensate...its oil, plain and simple, and quite a few refineries use it as input. All oil has "unstable elements" and gasses to be split out. THe winners are the guys that gather...
    26 Jun 2014, 11:31 AM Reply Like
  • 244
    , contributor
    Comments (889) | Send Message
     
    This is such a small part of the market. Most refiners don't refine this stuff. Its used to mix with heavy crude to make it viscous enough to flow easily through the pipelines. Then its separated and sent back to other end to mix again. There is more than is needed here so whats the big deal? How is this going to change the price of WTI or Brent. The amount produced each year in miniscule.

     

    Personally I though the refiners dropped today in sympathy to CVRR. They had a large SPO today with tanked the stock price ahead of all the other refiners. As the morning passed all the other refiners followed suit.
    25 Jun 2014, 08:19 PM Reply Like
  • Douglas E. Johnston
    , contributor
    Comments (1773) | Send Message
     
    are u kidding me?

     

    "In the Eagle Ford in south Texas, about 70 percent of it falls into a category called condensates, which are ultra-light hydrocarbons."

     

    most shale oil is of the lighter variety since crude is hard to squeeze out of rocks
    26 Jun 2014, 11:35 AM Reply Like
  • 244
    , contributor
    Comments (889) | Send Message
     
    I'm not kidding you. Condensate make up less than ten percent of US production. Perhaps this will create a new market for condensate. If it does companies will double down on their drilling and more will be produced. If a little is exported is will lower our trade imbalance which is good for us. If you think a lot of this is going to be exported it could have a small affect on Brent which is also good for us. The splitter plants will likely have a lot bigger impact on this than allowing the sale of condensate which most US refineries are not set up to refine.
    26 Jun 2014, 11:53 AM Reply Like
  • hooper you know
    , contributor
    Comments (30) | Send Message
     
    Pump prices will not spike with the broadened export of crude since we're already paying the international price for gas and diesel. Refiners are reaping big profits by being able to export product while paying less for distressed crudes bottled up at the gulf coast. Pump prices will actually go down with the increased export of crude.
    27 Jun 2014, 09:08 AM Reply Like
  • Douglas E. Johnston
    , contributor
    Comments (1773) | Send Message
     
    not sure pump prices go down but refining margins should decline as, you are right, they've made a lot of $$$s last few years....
    27 Jun 2014, 11:17 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs