Inventories Report Not All Good News for Refiners

Inventories Report Not All Good News for Refiners

The EIA report appeared positive for refiners — on the surface at least — and shares of independent refiners rose with the broader market. Valero Energy shares added $3.12, or 6.4 percent, to close at $51.68. Tesoro Corp. gained $2.01, or 7.7 percent, to $27.99. Sunoco Inc. added $2.89, or 5.6 percent, to $54.94.

Gasoline inventories last week declined by 5.5 million barrels from the week before. Lehman Brothers analyst Paul Cheng noted that while the draw was higher than the 1.8 million average expected by analysts, it was in line with the seasonal trend for the last three years.

And although the report showed gasoline demand up slightly from the previous week, Cheng thinks demand is overstated compared with previous years. “Ethanol blending is included in the weekly number. Since ethanol demand has been rising, the underlying refinery grade gasoline consumption growth rate is much worse than the weekly DOE figures.”

He also said the data is not consistent with reports from the Federal Highway Administration and state tax authorities that show gasoline demand declining.

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