CBrown1818

The Relationship between Oil, Drillers and Refiners

One thing to bear in mind is the rate at which oil prices are climbing/dropping in comparison to gas prices rising/declining. As oil prices rise slowly this is great for refiners, because gas prices tend to rise too, increasing profit margins despite the slowly increasing costs of oil. However if oil prices rise too quickly vs gas prices, refiners are in for some tough times because the price of oil exceeds what they can make from selling the gasoline. If oil remains near its current price or goes higher over the next few months expect some bad quarterly reports from refiners in the near term. However those who are positioning themselves to and will be strong enough to weather these circumstances will make a great recovery once gas prices rise to meet oil. Valero and Tesoro are my top picks. I hate WNR.