With the summer driving season coming to a close and the economy possibly slowing, is anyone looking at shorting or buying puts on US independent refiners? Western Refining seems like it may have some downside potential. I am long the October 55 puts at 5.30. Obviously a hurricane heading into the Gulf of Mexico could send gasoline prices thru the roof, but absent that or a fire at a major refinery, it seems that gasoline prices should tend to go lower or at least the crack spread narrow somewhat.
Those VLO Dec 65 puts do look like a good idea. I had some October 70 puts on VLO but sold for a quick profit on Friday when it dipped. I was somewhat worried about puts on VLO since it had some recent upgrades and some of the price targets were above the current price, but with a projected slow down in driving, the stock should have some pull back... I would think. It will be interesting to see what effects a fed rate cut of 25 or even 50 basis points would have on stocks in an industry like refining. One would think that the effects would be minimal.
Well since oil is dollar denominated, a cut in rates would weaken the dollar, causing crude to go up. A portion of oil's run to 75 is pricing for the dollar. Its not intuitive but the refiners stock price seem to do better in environments where oil is expensive. I haven't figured it out. The summer driving season is over but there is scheduled and unscheduled shutdowns of the refineries coming. Who bloody knows!
Bailed on the WNR 55 puts today, took profits ahead of the oil and gas inventory numbers. Crude oil just seems way too strong and gasoline not as weak as I expected at this time. I am looking to get back into puts on these a little later on. In the meantime looking at calls on RIG in the short term.
It's sitting right at short and long term support. If it closes below todays low it has potential to drop to 62.50, but not much lower than that. Personally, it looks like a good place to buy right here.
No. The end of driving season trade didn't work this year. It acutaly happened in July this year for whatever reason. Now inventories of gasoline are record lows and this SEPT spreads are much better than last Sept. There isn't much to do here long or short on refiners as they are well off highs. Timing these things is tough. I have the battle wounds to show from trying.
Silk, do you believe that the refiners will stay about where they are, even with pressure from all the ethanol supposedly coming to the market soon? I understand your point about the drop in July, but it seems such a drastic change for them to stay so strong during the fall. Is the country just stuck with $3 per gallon gasoline for the forseeable future? I guess that crude will hit $80 soon and the global energy demand is just too strong to play the downside on these stocks. Time to get long some good oil service stocks?
Refiners have been very strong the last few days. Different storms , Humberto, Ingrid affecting refiners, bullish for RBOB Very volatile, Usual end of driving season or decline of crude hasn't seen sept. sell off , yet? Should be seeing huge builds but Oil @ record highs. This qtr is usually off peak demand(bearish), Weak dollar and potential fed cut on Tues(bullish) bolstering everything.
Maybe that seasonal weakness in the refiners was just delayed? Supposedly refining margins are shrinking (as of now). I just could not help buying the VLO October 70 puts today, especially after that gasoline inventory build.