Let me remind you of something of great importance, regarding the refiners: business has never been better. That’s right, despite the selling, the underlying businesses are running at RECORD margins.
Look at WNR. They get most of their crude from Eagleford shale and Cushings. Are you aware of the discount between WTI and Brent? Right now it’s nearing $22, an all time high. Are you familiar with the term “crack spreads”? Essentially, that’s the margin the refiners garner by selling their refined product. Well, that’s up another 5% today, nearing $32, another all time high.
The sector has been sold off for one reason and one reason alone: idiots are pricing in a recession. Not only are idiots pricing in a recession, they are surmising people will not drive cars or fly in airplanes or heat their homes either. The idea that demand destruct is around the corner, whilst these spreads are screaming the contrary, is preposterous.
I am heavily long WNR, CVI and some ALJ. If I was cash rich and light in the sector, right now, I’d be buying with two fists clenched, screaming “fuck the world.”
My favorites are WNR, CVI, ALJ and HOC.
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How much WNR are you holding now?
About half a pound more than you.
I think you underestimate how much WNR Fly is holding.
FLY
Questions…
is shale oil pried at a spread to WTI? Is the pricing more stable perhaps?
also why the importance of the spread between WTI and Brent.. IF you’re selling in the US market it doesn’t matter at all where Brent is. Is there arbitrage direct into the Brent markets?
Eagleford liquids sell at a premium to WTI because they are better.
WTI Brent arbitrage doesn’t matter much in the case of WNR. Other coastal refiners, it does. Sorta.
ok thanks
So the coastals can arb into brent obviously.
Yes, though they generally don’t as shipping costs, and timing risk factor in.
SIRIously it sounds like you’re really LMLPeeing on the bearshitters out there…good for you. After you’re done let’s skin them for their hides.
wnr, that thing is gonna explode like a wnr should
just added 50 more wnr limit order got filled @ 15. 80.
take it easy, will ya … think what that’ll do to the bid/ask spread
lol
my wnr has a first name it’s o-s-c-a-r……my wnr has a second name………you know the rest.lol
he he,i always use limit orders that are 1 penny below bid.99% of the time i get filled.when they filled it, no sooner than refreshing my page, da sob was 3 cent higher…mmmwwwwwaaaaaaaaa.it’s da jooish in me
One of the reasons they are getting a crap multiple is the political headline risk. Where XOM and CVX can look congress in the eye and tell them to go fuck themselves, the indy refiners don’t have the clout to do that. You think we can go through an election cycle with $4 gas without all the candidates promising to get gas down so Joe the Plumber can drive his F350 to the jobsite?
4 dollar gas will remain the norm. get used to it. and if a politician says he/she will bring the price down, is a liar. you have to remember, it is in the best interest, of the feds, to keep gas as high as it can be. they are living of the sales tax to pay everyday bills. besides, ceo of wnr,cvi, etc, just call their buddy rex, and have him tell them to go piss up a rope.
Gas tax is collected on a per gallon basis, not a percentage like sales tax. So it could be argued (maybe proven) that higher pump prices result in less consumption and consequently less tax revenue. But they do like to keep people dependent on the govt… high gas can help in that quest – and the govt can always blame someone else for the high price (evil Big Oil, speculators, the weather, terrorists, Texans… whatever).
“so Joe the Plumber can drive his F350 to the jobsite?”
What job site?
We are now a country of $10 an hour customer service and call center centers.
This country is broke as the result of years of politicians lying, stealing our money to entrench themselves in power, and just plain political malpractice.
China, among others manipulates it’s currency to our disadvantage.
Let’s do trade wars. We have nothing to lose. They do.
Joe is a lying sack of unlicensed Plumber’s Helper. Never was a plumber, just some lackey, slapped in the face with slices of hot pizza by oil barrons passing by in their Rolls on the way to the rodeo.
EWP EWG VGK AIB NBG IRL STD .
Track these 6 , and you can monitor the euro crisis in real time.
These are all outperforming the SPY today. And they will continue to lead the way for the broad market and EURUSD, if they can just hold the recent lows.
~130 on spy, today or tomw, then retreat a bit, to give this basing pattern (if it is indeed a basing pattern) some shape, y’think?
WNR is one of my best performers today…glad i averaged down on that beast.
not only are the cracks spreading (like in my sidewalks) but hurricane season is just around the corner, matter of fact we already had 1 hurricane in the Pacifico, off the coast of Mexico. But, unfortunately, the candidates are gonna have to promise lower gasoline prices, one way or another.
Raise taxes on the oil companies. That will lower gas prices.
you are an idiot. Tthat will raise them, because they will pass it on to you.
I think he was being sarcastic.
we need a sarcasm symbol that we can use. the printed word does not communicate well. there are alot of people who believe that raising taxes on oil companies will lower prices – like Obama and his comrades.
How about a picture of W?
Pic of W?
http://www.google.com/imgres?imgurl=http://3.bp.blogspot.com/_YzBo7Kz5y1M/TLWZtf36f6I/AAAAAAAAA08/D8CZFiq5jKc/s320/Western-Refining-logo.gif&imgrefurl=http://notablecalls.blogspot.com/2010/10/western-refining-nysewnr-deleveraging.html&usg=__SdmxlZyUjx4ewyQjVJUAhDDSHc4=&h=195&w=191&sz=11&hl=en&start=0&zoom=1&tbnid=iOtWw8QpADsbOM:&tbnh=128&tbnw=125&ei=MaD3Tf7IBYriiALExoH_DA&prev=/search%3Fq%3Dwestern%2Brefining%2Blogo%26hl%3Den%26biw%3D1024%26bih%3D578%26gbv%3D2%26tbm%3Disch&itbs=1&iact=hc&vpx=151&vpy=96&dur=152&hovh=156&hovw=152&tx=99&ty=76&page=1&ndsp=19&ved=1t:429,r:13,s:0&biw=1024&bih=578
Mr. Fly.
I could be wrong but I haven’t seen Trading Nymph post since you graded her blog and called her obsessive-compulsive.
Hurt feelings?
lol.
Fly, you gotta be careful with gals. Their feelings are very important.
Ha Ha.
Fly needs to go listen to that song “Feelings”- “whoa whoa whoa”.
Now I feel bad too. Trading Nymph come back – it is always a pleasure to read your posts.
Is it just me or does that WNR logo look pretty close to the logo for Vienna Beef?
http://www.dicrescenzos.com/hotdogs.html
ha ha i’m going by there this afternoon. vienna dogs rule
Ask for extra sport peppers and as Ernie Banks used to say, “Let’s eat two.”
Actually, he said let’s play two, but you get the idea.
And then get another for Ron Santo.
http://wealthinsideralliance.com/free-daily-commentary/it%e2%80%99s-off-to-the-races-for-natural-gas/ just fould this…
Enough about your crack spread plays already … what’s “behind” BGC? Is that a hedge to your SCON buy awhile back for the personal account or is there some macroeconomic rational like the rebuilding of the national grid with or without AMSC superconducting wire?
“BUY BuY BUY !! FUCK THE WORLD,
… SIDEWAYS !!!!
8)
http://www.zerohedge.com/article/exclusive-feds-600-billion-stealth-bailout-foreign-banks-continues-expense-domestic-economy-
To spell it out: Our assumptions about the relationship between QE and stock prices needs quick revisiting.
Even the Fools are pumping their WNR this morning. http://www.fool.com/investing/general/2011/06/14/rising-star-buy-cracking-into-western-refining.aspx
http://www.theoaklandpress.com/articles/2011/06/14/news/nation_and_world/doc4df77c6ba28a5678464730.txt
G20 PROPOSED FOOD PRICE SCALE….North American farmers are completely finished if this goes through
I think Sarkozy is trying to go after commodity speculators rather than farmers. Of course, it’s misguided global socialism. Probably predicated on politics in France. Obama may be sympathetic, which is a little scary.
There’s no problem with price scales. They should include French wine, cheese, perfume, and throw in aircraft & engines too. All of those prices are unfair to Somalians.
I hit the wrong thumb…good stuff
Barrabas will have to see where pizza is grown first before he makes a command descision
http://www.businessinsider.com/now-it-gets-interesting-goldman-gave-paid-internship-to-libyan-officials-brother-2011-6
Another Libya development…
Fly,
Any thoughts on BORN? Are they doomed? I remember a while back you had done some research on the fundamentals and thought the shorts were full of it. They’ve certainly been winning the battle lately.
Added to the IRA:
ENP @ $20.65
SSW @ $14.90
http://wattsupwiththat.com/2011/06/14/the-major-aas-solar-announcement-suns-fading-spots-signal-big-drop-in-solar-activity/
Maybe I should have taken that job in Carlsbad…
Possible end to correction should we clear the pivot @ SPX 1291 (+/- 7) … a close or rally taking us over 1298 would be very positive and could even signal the start of the next wave up.