Death of U.S. refiners is "greatly exaggerated," Cowen says


Most refiners recover part of yesterday's big drop, which some say was an overreaction to the U.S. government move to allow two oil companies to export ultra-light crude oil for the first time: TSO +2.8%, VLO +2%, PSX +1%, CVI +0.7%, CLMT +0.7%, WNR +0.6%, MPC +0.2%, ALJ -1%, PBF -0.6%, HFC -0.3%.

The death of U.S. refiners is "greatly exaggerated," Cowen analysts say: "The spirit of the law - that hydrocarbon liquids produced in the U.S. must be processed in the U.S. - remains in place, and permits for condensate exports do not constitute precedent for crude oil... We continue to see potential for a meaningful feedstock advantage for U.S. refiners emerging later in 2014."

Ned Davis Research, however, thinks the news is "potentially game changing for refiners," since it signals a change in the government’s position on oil exports more broadly and noting that it is the export ban, plus inadequate pipeline infrastructure, that has fed recent refiner outperformance.

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Comments (1)
  • Jbacle
    , contributor
    Comments (24) | Send Message
     
    It would seem logical that the inland refiners who are ideally located near the production and the points of consumption of product would be least impacted by this change, however uncertainty and other factors are a good excuse to take some profits, especially if you can operate on their money going forward.

     

    The refiners near the gulf coast would probably benefit in the short term, but as global supply afloat increases, parity should follow. Opening the northern portion of the Canadian crude pipeline is probably less than 6 months ahead. Then the mix-master marketers will have many more options.
    27 Jun 2014, 02:40 PM Reply Like
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