Within the oil complex, it seems from a novices point of view (my own) — most pressure is being applied to the downstream area of the market aka the refiners. At times in the past when crack spreads blew out and attracted all of the hot money into the space, it crested and took late comers down with it as spreads narrowed. However, given the unique scenario in regards to the war and how the EPA is causing all sorts of havoc here under the banner of ESG — I think it’s worth noting when something like this is happening.
321 cracks are sustaining the $50+ levels, unheard of margins. The sort of margins we are seeing now would suggest $300 crude.
You can see below on the 10yr chart, this level far exceeds the time I was buying WNR and making phallic jokes about it.
The stocks in the space are NOT cheap on a historical basis, with VLO trading at 0.43x sales now. But the ratio has been above 0.4 since 2016 and will be much lower by next year, providing these margins continue and the world doesn’t collapse — seeing that sales are roughly growing at 100% per annum now.
Here are the top rated refiners inside Stocklabs.
Dohmen Capital says inflation heads toward 20%. CPI, not the real numbers.
Maybe all the king’s horses and all the king’s men can reign it in by midterms?
I’m rooting for them but betting against them.
WNR yes I do recall those days. The arrival of a Russian winter will prove most insightful.
WNR yes I do recall those days. The arrival of a Russian winter will prove most insightful.
WNR was one the best trades I had/have ever seen. Christ, decade ago?
Ohhhh, I love it when crack spreads blow