U.S. crude oil refiners’ stocks are surging Friday following the release of the International Energy Agency’s (IEA) October Oil Market Report. U.S. refinery throughput in September led to the agency to increase its forecast of global refinery production by 100,000 barrels a day to 77.3 million barrels a day. Throughput rose by 1.2 million barrels a day year-over-year despite a drop of 700,000 barrels a day at European refiners.
U.S. exports of refined products such as gasoline and diesel fuel totaled 3.37 million barrels a day in the first week of October, more than 500,000 barrels a day more than in the same week a year ago and nearly 900,000 barrels a day more than the first week of October 2011.
Booming crude oil production from the Bakken play in North Dakota and the Eagle Ford and Permian Basin plays in Texas is giving refiners a very strong position regarding the price they pay for domestic crude. Including transportation costs, refiners are paying an amount that meets or beats the price of imported Brent by enough to enable shipping the refined products to Europe and still make a profit. This is true both for primarily Gulf Coast refiners like Valero Corp. (NYSE: VLO) and Marathon Petroleum Corp. (NYSE: MPC) and East Coast refiners like PBF Energy Inc. (NYSE: PBF). Phillips 66 (NYSE: PSX) owns a refinery in New Jersey and three more along the Gulf Coast.
Refiners currently have the upper hand in oil business and barring some unexpected event will hold the upper hand for the rest of this year and into 2014.
Shares of Valero are up 3.6% in mid-afternoon trading Friday at $36.84 in a 52-week range of $25.49 to $44.76.
Marathon’s shares are up about 3.1% at $67.37 in a 52-week range of $52.36 to $92.73.
PBF shares are trading at $24.28, up 1.6% in a 52-week range of $20.15 to $42.50.
Shares of Phillips 66 are up 2.7% at $60.17 in a 52-week range of $42.45 to $70.52.