Refiners Shouldn't Fear Oil Exports Yet
Even prior to the news last week that the government would allow exports of very ultralight oil or condensates, investors in the refiners had to consider the potential for future exports of oil as a major risk. Based on the news, Marathon Petroleum (NYSE: MPC ) , HollyFrontier Corp (NYSE: HFC ) , and Phillips 66 (NYSE: PSX ) dropped for several days. The stocks had already traded relatively flat for a long time after peaking back in early 2013.
One has to wonder if the threat of exporting oil and the lowering of beneficial pricing differentials was already priced into the stocks. The Brookings Institution estimated that up to 700,000 barrels of ultralight oil could be exported starting next year. Does the drop in the above refining stocks provide a buying opportunity for these stocks, especially if the impact of relaxing the export restrictions isn't as severe as feared?
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