Inventories Status Sends Refiners Shares Reeling
The EIA report did not encourage investors to scoop up refiners’ shares. Lower oil prices notwithstanding, the rise in inventories was bearish for refiners, according to Lehman Brothers analyst Paul Cheng, who has a negative outlook for the sector.
“We expect gasoline margin may have already peaked and will likely resume their downward spiral by early May,” Cheng wrote in a note to investors. “With the heating oil season now behind us, and signs of weakness emerging in the on-road diesel market, we think the distillate margin could begin to lose some luster in the coming weeks.”
In afternoon trading, Valero Energy Corp. fell $2.46, or 4.8 percent, to $49.03. Tesoro Corp. lost 78 cents, or 3 percent, at $25.37. Earlier, Tesoro shares hit a new low of $24.93. Sunoco Inc. gave up 97 cents at $46.88, and Frontier oil fell 26 cents to $24.92. Frontier hit a new low of $24.61 during the session.
