U.S. oil refiners are anticipated to report “record” quarterly earnings throughout a historically weak season, analysts at BofA Securities stated in a word Thursday, calling it a “golden age of refining.”
The analysts on common raised their first-quarter earnings expectations for refiners by 9%, due to a “strong finish” for crack spreads, or the distinction between crude oil futures costs and costs for gasoline and different refined merchandise.
“We find a single trend for all names under coverage: record 1Q23 earnings for what is normally the lowest seasonal earnings of the year and a set-up we see potentially supporting continued strength in the run up to the driving season,” the analysts, led by Doug Leggate, stated within the word.
BofA stated refiners Valero Energy Corp.
VLO,
and PBF Energy Inc.
PBF,
proceed to benefit from the “the best leverage to a robust refining environment.”
For its flip, Marathon Petroleum Corp.
MPC,
presents the “most robust buyback program in energy, with more than a third of shares repurchased since 2021, with no slowdown in sight,” the analysts stated.
Refined merchandise have seen the very best seasonal demand in 5 years and for gasoline and jet gas the very best absolute demand because the begin of the pandemic, the BofA analysts stated.
“With retail gasoline prices holding around $3.50/gal, we continue to expect the first ‘normal’ driving season since COVID, but with over 1mm bpd of net refinery closures increasing US dependency on gasoline imports, particularly on the US East Coast,” they stated.
Refiner shares have misplaced floor this week, reeling from Saudi Arabia and its OPEC+ allies stunning markets final weekend by asserting one other spherical of manufacturing cuts, prompting a rally for crude futures .
For the final 12 months, nevertheless, the shares far outperform an vitality ETF and the broader fairness market.
Shares of Valero are up 28% within the interval, whereas shares of Marathon gained 51%. PBF inventory is up 56%. That compares with an advance of 12% for the SPDR Energy Select ETF
XLE,
and contrasts with losses of round 8% for the S&P 500 index
SPX,
Source web site: www.marketwatch.com
