- J.P. Morgan has a favorable outlook on the refining sector heading into Q3 earnings, as the group has sold off since September on a combination of factors, including fears about the crude export ban being lifted and narrowing crude differentials, despite good product cracks.
- Two of the biggest drops among refiners have been suffered by Valero Energy (VLO -2.7%) and HollyFrontier (HFC -2.6%), each ~13% since the group's peak; of the two, JPM likes VLO going into the quarter, particularly in the event of any favorable updates around capital allocation.
- The firm thinks Tesoro (TSO -3.2%) is set up for another solid quarter but that investors must be expecting it, given that shares are down only ~3%.