0714marathon.jpg

Refiners offer safe haven amid oil price plunge

Shares in U.S. refiners continue to show resilience and even strength amidst ongoing oil price declines. For example, Marathon Petroleum's shares have climbed 51 per cent over the past 12 months.

Energy stocks happen to be selling off so far this month as oil prices dip lower once more, but shares in U.S. refiners continue to show resilience as well as strength amidst the ongoing troubles.

“While most investors are experiencing a decline within the price of their energy stocks the refiners do incredibly well,” said Bob Sewell, chief executive of Bellwether Investment Management in Oakville, Ont.

U.S. crude futures appeared 84 U.S. cents, or 1.6 percent, at US$53.04 Tuesday, but have fallen 40 percent over the past 12 months.

“The fall in oil prices is really helping boost profits for the refiners because the price at the pump isn\’t falling.”

Access for an abundance of cheap crude has led to better-than-average share returns for many of the biggest refiners south from the border in the last year.

Tesoro Corp., for instance, has soared 66 per cent over the past Twelve months compared to a 24 percent drop in the S&P 500 energy sector index.

Marathon Petroleum Corp., another U.S. refiner, has climbed 51 percent, and Valero Energy Corp. expires 33 percent.

Sewell believes these names should benefit further within the next few months because summer is usually a peak demand time for gas, but he is less certain about the future performance of Canadian integrated producers such as Suncor Energy Inc. and Cenovus Energy Inc., whose performance has “not been stellar up to now.”

Related