When I refer to “crack” I am talking about the spreads enjoyed by refiners, especially mid-continent refiners like WNR and HFC, with respect to their cost of crude to what they charge for retail distillates. Thanks to Obama, we have a fucked up pipeline infrastructure in this country. God willing (ironies abound!), the liberals in this country will prohibit any new pipeline from building built.
See WNR gets their crude from W. Texas, known as the Eagleford Shale. They have to truck the oil from Eagleford to their refineries in El Paso–because there isn’t any pipeline infrastructure. Due to logistics, the crude at Eagleford sells at a discount to WTI, which is already at a $22 per barrel discount to Brent, the standard by which all electronic trading is based upon.
The result is WNR gets to steal from you, each and every time you fill up your tank. They are the most leveraged and best positioned at out all the mid-continent refiners. I was very early to the name a few years back, playing it from $12 to $24. Since then, the company paid off debt, made a shit load of money, and even issued a special dividend.
At the moment, 321 crack spreads are north of $26 per barrel. More importantly, the Brent-WTI spread is north of $22. Anything higher than $10 is fantastic. Having a $22 per barrel discount is insane.
Where is the stock going?
Higher.
NOTE: You can monitor the spreads mentioned above in the drop down/scrolling market data at the top of site.
NOTE II: The words”Eagleford Shale” should be replaced with “Permian Basin.” The logistics remain the same, however.
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Fly, does PSX enjoy the same crack as WNR ?
fly..WNR gets their oil from the permian basin..not the EF..surprised you don’t know that
Correct, they do get oil from Permian. The logistics are the same and El Paso is pretty close to Permian.
I have it in my head they were receiving crude from Eagleford. I need to brush up on my WNR.
Just found a penny on the sidewalk. Forgot we still made those.
Market is rolling over like turkey roadkill.
Let us continue shipping oil throughout the country via clean burning coal trains!
ZLC on the cusp of breaking out into a massive amount of free air. Could AMC earnings today be the catalyst?
Don’t forget to turn the lights off!
Crack? Now you’re talking.
IMHO, Market wants Greek Cocaine, EU is meeting right now and may start the process of giving Greece their drugs…we will see.
AAA comment TM.
Now where doya want said BRA tattoo?
Why the discount for crude being sold in Texas? And why the price difference between brent and WTI? Where can I read more about these subjects?