Stocks on the Move: Refining and Marketing, Integrated Energy

Transcription

1 Stocks on the Move: Refining and Marketing, Integrated Energy By Nic holas Chapman Jan 05, :42 AM Which Energy Commodity Is Rising in the New Year? Crude oil and natural gas are rising For the week starting January 1, 2018, crude oil prices have risen ~2%, from last week s close of $60.42 per barrel to $61.63 per barrel on January 3, Even natural gas (UGAZ) (DGAZ) (BOIL) prices rose from their last week s close of $2.95 per mmbtu (million British thermal unit) on December 29, 2017, to $3.01 per mmbtu on January 3, 2018, an increase of almost 1%. Gasoline is sluggish, heating oil rises For the week starting January 1, 2018, unleaded gasoline (UGA) prices have risen marginally from their last week s close of $1.796 per gallon on December 29, 2017, to $1.797 per gallon on January 3, 2018, an increase of ~0.1%. Two weeks before, gasoline prices regained their 50-day moving average, which currently stands at $ Even heating oil (UHN) prices have risen this week by ~1%. Gasoline and heating oil prices impact refining companies (C RAK). Energy stocks With the positive performance from all energy commodities, energy stocks are showing some strength this week. As of January 3, 2018, the Energy Select Sector SP DR ETF (XLE), which

2 represents an index of stocks across the energy sector, rose ~3.2%. Stocks that are leading the rise in XLE are the following: Apache (APA): rose 7.4% Noble Energy (NBL): rose 6.4% Baker Hughes (BHGE): rose 6% In general, for the week starting January 1, 2018, XLE is outperforming the SPDR S& P 500 ETF (SPY). As of January 3, 2018, SPY has risen 1.4% for the week. In this series Having analyzed the performance of the broader energy sector in the current week, we ll look at the performance of energy sub-sectors in the rest of this series. Specifically, we ll look at the gainers and losers from the integrated energy and refining and marketing sectors. We ll also try to analyze any news or developments behind the moves. Let s start with the refining and marketing gainers for this week. Refining and Marketing Gainers This Week: MPC, INT, DK, PBF, ANDV Refining and marketing gainers In this part of the series, we ll look at the top percentage gainers from the refining and marketing sector in the United States for the week starting January 1, To compile the list, we ve selected refining and marketing companies with market capitalizations greater than $100 million and last week s average trading volume of more than 100,000 shares.

3 Marathon Petroleum: At all-time high In the current week starting January 1, 2018, Marathon Petroleum (MPC) leads our list of gainers in the refining and marketing group. It rose from last week s close of $65.98 to $68.61 on January 3, 2018, an increase of ~4%. Marathon Petroleum rose strongly on Tuesday and Wednesday and made a new all-time high of $ In October 2017, it surpassed its previous all-time high of $56.24 set in December Since October 2017, MPC has been making new all-time highs every month. This week s rise in MPC is part of a strong uptrend that started in August The stock has risen ~40% since August 21, As of January 3, 2018, MPC is trading at $68.61, whereas its 50-day and 200-day moving averages are $54.20 and $45.10, respectively. Other gaining refining and marketing stocks this week Marathon Petroleum (MPC) is followed by World Fuel Services (INT), which has risen ~3.5% in the current week. On Wednesday, January 3, 2018, INT crossed its 50-day moving average. After trending downward for most of 2017, it has been rising since November 16, 2017, and has gained ~10%. In 2017, INT fell ~38%. As of January 3, 2018, INT is trading at $29.11, whereas its 50-day and 200-day moving averages stand at $28.41 and $34.02, respectively. Other notable gainers in the refining and marketing group are Delek US Holdings (DK), P BF Energy (P BF), and Andeavor (ANDV). DK, P BF, and ANDV have risen ~3.2%, ~2.6%, and ~1.9%, respectively, so far this week. In general this week, the VanEck Vectors Oil Refiners ETF (CRAK) has fallen ~0.6% due to sluggish gasoline (UGA) prices. To know more about how gasoline prices are performing this week, refer to

4 Part 1 of this series. In comparison, the SPDR Dow Jones Industrial Average ETF (DIA) has risen ~0.6% this week. Refining and Marketing Stocks That Are Losing This Week Refining and marketing losers In this part of our series on the biggest movers in the energy sector, we ll look at the top losing stocks in the current week from the refining and marketing sector in the United States. To compile the list of top refining and marketing losers, we ve selected refining and marketing energy companies with market capitalizations greater than $100 million and weekly average volumes of more than 100,000 shares. Par Pacific Holdings: The top laggard Par Pacific Holdings (PARR) is the biggest laggard from the refining and marketing sector in the current week. It fell from last week s close of $19.28 to $19.10 on January 3, 2018, or marginally by ~0.9%. While there s no specific news release from P ar P acific Holdings this week, on December 21, 2017, it closed the private offering of 7.75% senior secured notes due 2025 for an aggregate principal amount of $300 million. PARR intends to use the net proceeds to repay the existing debt of Par Petroleum. PARR also announced a new asset-based secured credit facility of $75 million for P ar P etroleum. PARR intends to use the new credit facility for working capital and general corporate purposes. The other refining and marketing laggard in the current week is CVR Refining (CVRR), which has

5 fallen marginally by ~0.6%. Even though the falls for PARR and C VRR aren t substantial, the stocks are widely underperforming the P owershares Dynamic Energy Exploration & P roduction ETF (P XE), which has risen ~2.7% this week. In comparison, the SPDR S& P 500 ETF (SPY) has risen ~1.4%. Integrated Energy Gainers This Week: CVE, PBR, CEO, STO, XOM Integrated energy stocks In this part of our series, we ll look at the top gainers from the integrated energy sector in the United States for the week starting January 1, Cenovus Energy: The top integrated energy gainer C enovus Energy (C VE) is the leading gaining stock in the current week from the integrated energy sector. It rose from last week s close of $9.13 to $10.30 on January 3, 2018, or ~12.8%. It rose significantly on Tuesday and Wednesday and moved above its 50-day and 200-day moving averages. This is C VE s third attempt in the last month to cross above its 50-day and 200-day moving averages. For the past month, C VE has repeatedly been sold above its 50-day and 200-day moving averages. As of January 3, 2018, CVE is trading at $10.30, whereas its 50-day and 200- day moving averages stand at $9.67 and $9.14, respectively. This is a bearish sign and could indicate an end to its uptrend, which has been going on since June The other integrated energy gainers in the current week are P etrobras (P BR), C hina National

6 Offshore Oil (CEO), Statoil ASA (STO), and ExxonMobil (XOM). PBR, CEO, STO, and XOM have risen ~6.6%, ~5.7%, ~4.6%, and ~3.7%, respectively, as of January 3, It s worth noting that ExxonMobil (XOM) has been on a strong uptrend since August 31, 2017, rising almost 15%. Due to this uptrend, XOM s 50-day moving average crossed above its 200-day moving average in October 2017, a positive technical posture. As of January 3, 2018, XOM is trading at $86.70, whereas its 50-day and 200-day moving averages stand at $82.73 and $80.26, respectively. It s trading very close to its 52-week high of $ This week, the ishares US Energy (IYE) has risen ~3.2%. IYE has exposure to integrated heavyweights ExxonMobil (XOM) and C hevron (C VX). In comparison, the SP DR Dow Jones Industrial Average ETF (DIA) has risen ~0.6% this week. In the current week, there are no losing stocks in the integrated energy space. Next, we ll take a look at Wall Street analysts ratings. Analyzing Wall Street Targets for MPC, PARR, CVE, and XOM Wall Street recommendations To conclude this series on the movers and shakers in the refining and marketing and integrated energy sectors, we ll look at Wall Street analysts recommendations for the stocks on our list. Recommendations for Marathon Petroleum As of January 3, 2018, Reuters reported 19 analysts with recommendations for Marathon Petroleum (MPC). Six of them have given the stock a strong buy recommendation, and eight have rated it a buy. There are five hold recommendations and no sell or strong sell ratings. The median price target for MPC is $73, which is 6% higher than its January 3, 2018, closing price of $ Recommendations for Par Pacific Holdings As of January 3, 2018, Reuters reported four analysts with recommendations on P ar P acific Holdings (PARR). One of them has recommended a strong buy for the stock, and three have recommended a buy. There are no hold, sell, or strong sell ratings for the stock.

7 The median price target for PARR is $22.50, which is 18% higher than its January 3, 2018, closing price of $ Recommendations for Cenovus Energy Currently, 50% of Wall Street analysts rate Cenovus Energy (CVE) a strong buy or buy, and 43% rate it a hold. Around 7% of them have recommended a sell or strong sell for the stock. The median price target for CVE is $14.25, which is 38% higher than its January 3, 2018, closing price of $ Recommendations for ExxonMobil Currently, 32% of Wall Street analysts rate ExxonMobil (XOM) a strong buy or buy, and 48% rate it a hold. Around 20% of them have rated it a sell or strong sell. The median price target for XOM is $85, which is 2% lower than its January 3, 2018, closing price of $86.70.