Dec. 4, 2015, 12:41 PM
- Credit Suisse analyst Edward Westlake says favorable market conditions that drove the oil refining business this year will carry over into next year, making many refiner stocks strong buys.
- Global gasoline demand grew at 3x its historical rate in 2015, and while consensus expectations for gasoline demand predict a regression closer to the long-term trend in 2016, Westlake sees at least another year of strong demand growth remaining.
- The analyst says he has been surprised at Q4 performance so far , and predicts a 2016 environment conducive to earnings strength, especially among coastal names.
- Credit Suisse has Outperform ratings on these refiners: VLO +1.6%, NTI +0.5%, CLMT +1.5%, MPC +3%, TSO +1.2%, ALDW -2.3%, WNR +1.6%, PBF +0.2%, DK +1.7%.
Nov. 13, 2014, 5:37 PM
Jul. 11, 2014, 3:18 PM
- Citigroup analyst Faisal Khan says he is moving toward a more bullish view of the U.S. refining sector after a bout of selling amid low expectations.
- Khan points to continued growth in U.S. and Canadian oil production, "sticky" oil prices due to Middle East volatility, U.S. oil price differentials that are "somewhat contained" at $5-$10/bbl, and headway on refining closures in the Atlantic basin that is only a matter of time.
- As a result, the Citi team upgrades Marathon Petroleum (MPC +2.2%) to Buy from Neutral, as well as HollyFrontier (HFC +2%) to Neutral from Sell on valuation, but downgrades Alon USA Partners (ALDW -0.8%) to Neutral on the belief that Midland-Cushing differentials have peaked.
- Valero Energy (VLO +1.7%) and Western Refining (WNR +2%) remain the firm's favorites - VLO because it sees “crude-on-crude competition on the U.S. Gulf Coast resulting in greater feedstock discounts at Valero’s high conversion refineries," and WNR for its restructuring potential.
Jun. 25, 2014, 10:18 AM
- 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%.
Mar. 17, 2014, 3:59 PM
- Alon USA Partners (ALDW +3%) is upgraded to Buy from Neutral with a $19 price target, up from $16, at Citigroup.
- Expectations of faster growth from the Delaware and Midland basins in 2014 and slower ramp-up in the Permian pipeline projects have presented an opportunity for ALDW to capitalize over the near to intermediate term, the firm says.
- Combined with lower allocation for annual catalyst and turnaround reserves by $15M-$16M makes additional $0.25/share available for distribution, the firm says in expecting total distributions for 2015 to rise by $0.25-$0.45.
Nov. 14, 2013, 2:36 PM
- Refiners such as Marathon Petroleum (MPC +4.9%) and Valero (VLO +4%) are surging today, and Barron's Ben Levisohn says it’s all about the oil spread.
- While Brent crude has stayed steady for the last three months, trading at ~$109/bbl, WTI has dropped 12% to ~$94; the more expensive Brent is relative to WTI, the better it is for U.S. refiners.
- VLO, for example, has gained 17% during the past three months, and much of its price has followed the Brent-WTI spread.
- Also: PSX +2.1%, TSO +2.7%, HFC +3.2%, WNR +4.3%, ALJ +5.2%, ALDW +1.3%, CLMT +2.6%, CVI +1.3%.
Nov. 12, 2013, 12:45 PM
Nov. 11, 2013, 2:27 PM
- Alon USA Energy (ALJ +8.2%) and Alon Partners (ALDW +4.1%) are surging, despite weakness today in the broader refining sector, as Credit Suisse upgrades shares.
- ALJ could be worth up to $15/share, including the $2.25/share expected contribution from the Bakersfield start-up - delivery of this project is key; at current levels, the stock still provides ~20% upside in the scenario where Bakersfield does not proceed or ~40% if it does.
- On ALDW, for investors willing to overlook the possibility of no distribution payout in Q4 2013 and Q1 2014, the firm says the rolling 12-month potential forward yield starting in Q2 2014 is 15% and rises to ~20% by Q4.
Nov. 7, 2013, 7:59 AM
- Alon USA Partners (ALDW) -6.9% premarket after reporting a Q3 earnings loss of $0.26/share, which may not be comparable to the $0.04 consensus estimate; revenue rose 6.8% Y/Y to $882M.
- ALDW says no cash will be available for distribution this quarter, citing "a volatile and deteriorating margin environment resulting primarily from decreasing discounts for West Texas crude oil."
- Q3 also was affected by backwardation in the crude market and unplanned downtime at the Big Spring refinery in September which resulted in additional expenses and lost opportunity costs of $0.19/unit.
Jul. 24, 2013, 11:11 AM
Credit Suisse downgrades Northern Tier Energy (NTI -2.2%) and Alon USA Partners (ALDW +0.9%) to Neutral as part of a review of refiners after Valero's (VLO) conference call, where management continued to position RINs as a major 2014 hurdle and seemed less optimistic about Gulf Coast crude discounts until 2015. The firm also expresses EPS caution for variable rate refiner MLPs and VLO, ALJ and PBF.| Jul. 24, 2013, 11:11 AM | 8 Comments
Jul. 19, 2013, 2:07 PM
"The spread is dead," Global Hunter proclaims, as WTI crude (USO) rises above Brent (BNO) for the first time in nearly three years two days after the EIA reported a third consecutive weekly supply decline. Some analysts say a WTI premium may be here to stay, supported by a relatively better outlook for the U.S. economy and falling stockpiles. Brent meanwhile, may struggle amid receding geopolitical risks and global macroeconomic weakness. Refiners: ALDW -0.34%, CVI -0.22%, TSO +1.64%, HFC + 3.29%, MPC +1.32%, NTI -0.41%, DK +3.36%.| Jul. 19, 2013, 2:07 PM | 17 Comments
Jul. 12, 2013, 11:07 AM
Valero Energy (VLO +3.8%) has recouped early losses following a disappointing Q2 update and is making new highs for the day, as downside guidance apparently was priced in. Most refining peers also are higher: ALJ +3.7%, WNR +3.6%, HFC +3.5%, TSO +3.2%, CVI +2.9%, ALDW +2.6%, MPC +2.6%, PSX +2.5%, DK +1.8%, CVRR +1.7%, NTI +1.7%.| Jul. 12, 2013, 11:07 AM | 9 Comments
Jul. 10, 2013, 2:49 PM
It's another rough day for the big refinery stocks, whose margins are getting squeezed in the collapse in WTI-Brent spreads. Alon USA Energy (ALJ -9.1%) is hit especially hard after Barclays warns of a possible downside surprise in its upcoming earnings. Also: ALDW -5.9%, CVI -5.4%, CVRR -5%, TSO -4.5%, HFC -3.6%, PSX -3.3%, WNR -2.6%, MPC -2.6%, NTI -2.5%, DK -2.5%, VLO -2%.| Jul. 10, 2013, 2:49 PM | 4 Comments
Jul. 3, 2013, 11:15 AM
Feb. 5, 2013, 8:31 AM
Goldman Sachs upgrades Alon USA Partners (ALDW) to Buy from Neutral while downgrading Alon USA Energy (ALJ) to Neutral from Buy. ALJ shares are up by more than one-third since late December, while ALDW is down slightly over the same period; given the divergence, the firm sees meaningfully more upside for ALDW. ALDW +3.2%, ALJ -0.3% premarket.| Feb. 5, 2013, 8:31 AM
Dec. 31, 2012, 11:15 AM
Alon USA Energy (ALJ +10.2%) adds to its big Friday gains after Goldman starts coverage with a Buy and $21 PT. The firm notes ALJ, whose refining ops center around a Texas facility, benefits from spreads between Brent-WTI, WTI-Midland, and WTI-Cushing oil prices, and thinks the recent IPO of Alon USA Partners (ALDW +0.8%) which contains ALJ's interest in the refinery, will "help investors recognize the inherent value of the asset." ALDW has been launched at Neutral due to valuation concerns.| Dec. 31, 2012, 11:15 AM