Wed, Nov. 23, 7:47 PM
- The EPA today issued final regulations requiring that the amount of ethanol and other biofuels that must be blended into the U.S. fuel supply must increase by 6% next year.
- Since the result is a significant gain over the 4% the EPA recommended in an earlier draft proposal, it is a victory for ethanol makers and a defeat for oil companies that say using more biofuels in gasoline and diesel is costly and unachievable.
- The EPA set the 2017 target for total renewable fuel use at 19.28B gallons, higher than the initial proposal for 18.8B gallons as well as this year's 18.1B gallon requirement; the new mandate includes 15B gallons for conventional biofuel, which is mostly corn-based ethanol, vs. 14.5B gallons last year.
- Tesoro (NYSE:TSO) exec Stephen Brown says the plan is "unworkable" as it forces the use of biofuels beyond the blend wall and that it highlights the need for a legislative overhaul of the program.
- Shares in oil refiners mostly fell in today's trade: TSO -1.4%, VLO -0.8%, HFC -1.8%, MPC -0.3%, WNR -2.2%, PBF -3.5%, PSX +0.2%.
- Shares of biofuels producers rose: GEVO +8.5%, PEIX +7.1%, GPRE +2.1%, REGI +2%, REX +0.8%.
Wed, Nov. 9, 12:44 PM
- U.S. independent refiners are rallying as investors bet that a Trump administration will ease costly renewable fuel regulations.
- During the campaign, Trump unveiled an energy policy calling for the elimination of many regulations, including the system of buying and selling RINs, although Trump also has said he supports ethanol.
- RINs tracking ethanol use for 2016 have more than doubled in the past year, and RINs tracking biodiesel have jumped 59% Y/Y, according to Bloomberg data.
- In today's trade: CVI +22.5%, CVRR +15.4%, PBF +12.2%, HFC +11.7%, DK +6.1%, VLO +4.8%, WNR +4.4%, TSO +2.9%, MPC +2.8%, PSX +1.9%.
Sun, Nov. 6, 5:04 PM
Wed, Nov. 2, 1:20 PM
- This week’s Colonial Pipeline explosion and shutdown (I, II, III) looks like another weight for the refining sector which already is pressured by gasoline stockpiles that are holding on to historic highs for this time of year, with a glut left over from the summer, WSJ reports, and traders now expect supplies in the Gulf Coast and southwest to build up, stranded without a fully operational Colonial.
- Delek US (DK -3.9%) and Alona USA Energy (ALJ -7.3%) are the week's biggest losers so far, down ~10% in just two days, and Valero Energy (VLO -1.8%) and Marathon Petroleum (MPC -3.1%) also are sharply lower; the pervasive pessimism even drags down some that may benefit from Colonial’s problems, such as east coast refiner PBF Energy (PBF -2.4%), which has given back some of yesterday's gains.
- Refiners also continue to face rising costs for crude sold in later months and renewable fuel credits, as well as signs that the stabilization in gasoline prices has caused U.S. consumers to pull back on rapid demand growth.
Tue, Nov. 1, 9:13 AM
Fri, Oct. 28, 6:52 AM
Fri, Oct. 28, 6:34 AM
Thu, Oct. 27, 5:30 PM
Fri, Oct. 21, 10:31 AM
- A potential default by Venezuela's PDVSA would cause trouble for U.S. Gulf coast refineries, as the country is the primary supplier of foreign oil to the region, Bloomberg reports.
- PDVSA has been trying to persuade bondholders to exchange as much as $5.325B of outstanding notes maturing in 2017 for longer-term securities due in 2020, with the deadline for the swap due today after three extensions; the company says a failed bond exchange would make it difficult to make payments on its existing debt.
- “If PDVSA defaults, there could be a disruption of oil supply to the U.S. as creditors may try to seize payments made in the U.S.,” a Fitch Ratings analyst says. “Bondholders will definitely try to stake a claim on those dollars.”
- Phillips 66 (PSX -0.3%), Valero Energy (VLO +0.1%), PBF Energy (PBF +1%) and PDVSA subsidiary Citgo are among the largest buyers of heavy Venezuelan crude.
Wed, Oct. 19, 11:29 AM
- PBF Energy (PBF -4.1%) is downgraded to Sector Outperform from Focus Stock with a $24 price target, trimmed from $29, at Scotia Howard Weil, as independent refiners such as PBF are expected to report another quarter of disappointing earnings in the coming weeks.
- Scotia says even after closing on the deal for the Torrance refinery, ongoing operational hiccups on PBF's watch even after Exxon struggled to make repairs likely will distort Q3 and Q4 performance; also, the Chalmette facility has yet to deliver on investor expectations.
- The firm believes it will take time for PBF to show the true underlying capability of the assets, and until then, shares likely will lag as investors will be reluctant to assign much confidence in earnings or EBITDA forecasts.
Tue, Oct. 11, 3:25 PM
- Oil refiners have lagged to the point that “value signals are getting investors interested," Credit Suisse says while cautioning that it wants to see global product inventories drawn down before buying shares, and the process is only just getting started.
- Nevertheless, the firm upgrades Tesoro (TSO +0.8%) and Alon USA Energy (ALJ +2.4%) to Outperform from Neutral, joining Marathon Petroleum (MPC -1.1%) and Western Refining (WNR +0.5%) as its favorites names in the group, while stressing that November-January is the typical entry point.
- Meanwhile, Credit Suisse downgrades PBF Energy (PBF -4.3%) and Delek USA (DK -3.6%) to Neutral; PBF has the largest macro sensitivity to refining and RINs, which are depressing PBF earnings at a time when net debt has been elevated after the Torrance and Chalmette acquisition, the firm notes.
Tue, Oct. 11, 1:56 PM
- PBF Energy (PBF -5.5%) says it has begun to restart equipment at its Torrance, Calif., refinery following a regional power outage that affected ~80K Southern California Edison (EIX -1.1%) customers including the refinery.
- The outage follows a similar SoCal Edison outage last month that led PBF to begin talks with officials at the utility about improving its service to the refinery; PBF says it "will obviously look to accelerate those discussions" in the wake of the latest incident.
Fri, Sep. 9, 12:44 PM
- PBF Energy (PBF -4.6%) is downgraded to Sell from Neutral with a $19 price target, cut from $23, while CVR Energy (CVI +5.3%) is upgraded to Neutral from Sell with a $15 target, raised from $13, at Goldman Sachs.
- In cutting PBF to Sell, Goldman foresees negative free cash flow generation, reflecting ~6% 2016-18 free cash flow yield that translates to a long-term dividend reduction; the firm also cites downside to guidance at the Chalmette and Torrance refining assets, higher RINs exposure, and tough conditions in the U.S. east coast refining market.
- Goldman thinks CVR shares are due to stabilize after a tightening of Brent-WTI differentials and an increase in RIN- and ethanol-related expenses.
Tue, Aug. 30, 3:20 PM
- Exxon Mobil (XOM -0.3%) is seeking a potential buyer for its 60K bbl/day Billings, Mont., refinery, one of only two XOM refineries in the U.S. that is not integrated with its chemical operations, Reuters reports.
- Potential buyers including PBF Energy (PBF -0.5%) have visited the plant this summer, according to the report, which says the plant also could attract interest from other independent refiners and Canadian oil producers that seek additional processing capacity.
- The Billings refinery is considered one of the highest quality plants in the Rocky Mountains, but analysts say plants that do not produce chemicals may have a less predictable profit stream, making them candidates for majors to sell off as refining margins have narrowed.
Tue, Aug. 30, 12:58 PM
- Phillips 66 (PSX +0.6%) has cut production by ~5% at its 238K bbl/day refinery in Linden, N.J., amid weak refining margins, Reuters reports.
- PSX joins Monroe Energy's 185K bbl/day refinery in Trainer, Pa., in making economic run cuts on the U.S. east coast; the Delta Air Lines (DAL +1.9%) subsidiary continues to run the refinery at ~150K bbl/day following run cuts that began in July, according to the report.
- Philadelphia Energy Solutions, the largest east coast refinery, reportedly is currently running at full capacity; it is not yet known whether PBF Energy (PBF -0.1%) has made cuts at either of its refineries in Delaware City, Del., and in Paulsboro, N.J.
Tue, Aug. 16, 4:42 AM
- Billionaire investor Carl Icahn has called on the EPA to make changes to the market for renewable fuel credits or else risk "the mother of all short squeezes" that could bankrupt refiners.
- "The RIN market is the quintessential example of a 'rigged' market where large gas station chains, big oil companies and large speculators are assured to make windfall profits at the expense of small and midsized independent refineries which have been designated the 'obligated parties' to deliver RINs."
- Related tickers: VLO, NTI, CLMT, MPC, TSO, ALDW, CVI, WNR, PBF, DK, HFC, CVRR, NTI, ALJ, TSO, WNR, PSX, XOM, PBF