Valero's going higher. I won't guarantee it, but the facts sure seem to support it. The crack spread is what I'll be watching to try and determine when VLO has topped. I think it goes to $70+, which would match TSO breaking through its 52 week high (which it already did). http://www.bloomberg.com/apps/news?pid=20601087&sid=avyc7HVj96RA&refer=home Gasoline Demand Demand, which peaks between the Memorial Day holiday in late May and Labor Day in early September, was 2.1 percent higher than a year earlier in the four weeks ended March 16, the department said last week. Fuel demand will push oil higher in coming weeks unless there is a significant increase in U.S. stockpiles, Altavest's Hartmann said. Doubts about the strength of the U.S. economy may not be enough to slow oil's climb toward $67 a barrel. ``It's hard to know whether or not these high prices have done that much damage to the economy,'' he said. ``We're really seeing that gasoline is an inelastic commodity'' for most Americans. The Dow Jones Industrial Average dropped for the first time in six days yesterday after a Commerce Department report showed U.S. new home sales unexpectedly fell to the lowest level in almost seven years last month. Gasoline, Refining Gasoline for April delivery was at $2.0617 a gallon after rising 3.5 percent to $2.0677 yesterday, the highest close since Aug. 15 and the biggest one-day gain since Feb. 13. The more actively traded May contract was at $2.01 after rising 3.4 percent to $2.0152 yesterday. The jump in the premium for the April contract may reflect high prices in the physical gasoline market, Hartmann said. Prices have surged the past two months as demand rose and fires and break-downs slowed refiners' efforts to make fuel for the summer. The California Energy Commission asked Valero Energy Corp. to delay maintenance at its Wilmington refinery after processing rates in the state fell to the lowest since 1999, Commission spokeswoman Claudia Chandler said yesterday. The average U.S. pump price of regular gasoline rose 3.3 cents to $2.61 a gallon in the week that ended yesterday, the highest since Sept. 11, according to a U.S. Energy Department report yesterday.
five reason based on technical analysis why vlo might pullback: 1. MFI reads at over bought 2. todays candle was a bearish engulfing pattern 3. Momentum died in mid February 4. the last 7 candles leading up to today had small candle bodies, which means that even though they closed higher, it was a close battle. 5. High volume day for bears maybe time to take some money off the table?.. cm
CM, if your TA is right, I'll pocket a few points at my stop. If I see several days of downwards price action on high volume, that will take me there sooner. I believe there is a compelling reason to be long VLO when it has just started to break out, way before the summer driving season should cause steep draw downs of gasoline. I appreciate the feedback, but I'm as confident as I need to be to stay long for now. It doesn't mean I'll be right. If crude oil approaches $70, I'll be out.
I agree with you on the fundamentals. Last year when I looked at OIH, I was thinking to myself..DAMN!, why didn't I buy months before? when gas went up to 5.00 a gallon in some places. Just wondering, are you looking at others like DO, OXY, COP, BP, OIH? cm
Cash, I'm long STO, BJS and HAL right now. I am anything but diversified now, because I am leery of this market. I'm trying to hone in on what's working, or is defensive with a decent dividend. STO UL VLO BJS HAL I bought STO at the last minute, in lieu of COP. The valuation was good and the merger with NorskHydro peaked my interest. I'm thinking of going long ADM, although my first intuition doesn't feel right about it, and I'm also pondering trying to squeeze a few points out of FCX, since the volume and interest is there, for now. I know that holding BJS and HAL is very duplicative, but they have different dynamics and are operating in different regions and performing different services. I don't think oil is going much higher absent escalation with Iran, but who knows. I have the least diversified portfolio of anyone I know right now, and am ready to shut it down at clear exits, that I will not stray from.
Just an FYI: Chevron's Refinery in Richmond, California is due to start back up today after a prolonged absence due to maintenance issues. http://www.chevron.com/products/about/richmond/ CVX Richmond processes 240,000 barrels of crude per day!
It will not be enough. There is verifiable tightness in the supply chain, and 240k gallons per day won't alter that fact. Valero to $77 if not $87. Honestly, who knows... I am definitely committed to VLO, though. It will be a shining star in earnings season, among a crowd of relative dullards. Dude, if you want my VLO shares, go buy your own.
You might find this site useful in tracking the refinery profitability in California, also has historical data. http://www.energy.ca.gov/gasoline/margins/index.html
I disagree. 240k is a substantial amount of gasoline. Also, I suspect that the marketplace will start to discount the VLO refinery in Texas coming back online as well. Don't need your shares. Went short today with a $66.10 stop for a "trade".