FTO has been a favorite of mine for some time now and have been adding to my position every time the market insisted on giving it away. Have also sold mucho April Puts at ridiculous prices, the last batch just yesterday. What a nice bounce today! It was bound to happen eventually, these refiners had been beaten down way too far regardless of crack spread or recession, and now, to add icing to the cake, a really big drawdown and a monstrous hurricane. As a good Christian, I'm praying that IKE will go straight to Crawford.
I think it pays to be a bill miller on these refiners. I will hold these with patience, these guys dont have phony accouting, they are not levered 10-1+. they are selling at book value and they are not taking writedowns!
i agree with you guys, these are real not bullshit investment banks making REAL CASH, and when the crack goes in their favor they make tonnes of it. With the way cracks in the gulf have spiked in the last week something like 11$ to 16$ VLO should be well above $35 so its still a good buy if you late to the party, they all still are imo, i am long TSO and have been adding on weakness, ESPECIALLY with the drawdown in gasoline inventories is a major clue to go long as Tesoro has said countlessly that they are trying to "find" demand by producing less and i think they may have finally hit the sweetspot. Hurricane also helps to pop gasoline up so that if we see any further weakness in oil (which we will) gasoline will hopefully fall at a much slower rate (and it has already done so anyways from the peaks in july, crude is down twenty something percent while gas is down something like 9%)
Getting close to the row of DAILY highs up at 36.00 An amazing move off of a new low at 28.30 just three days ago!
You would think that there would be a whole LOT MORE people on ET that trade the energy sector given the incredible VOLATILITY in this group and chiming in on a thread such as this given Hurricane Ike, the potential for a disastrous storm "surge", etc. The fact that this thread is pretty much "dead" is quite telling.
vlo and tso did sweet f.a. while oil dropped 33%...I think people were freaked out that these stocks stayed in a super tight trading range despite the massive drop in oil...I was tempted numerous times but wisely stayed away.MAybe now it will break out but the history of the last month tells you no...or at leat it is not prudent. I tried picking a bottom in hero and got burned.I recovered some of my losses but with oil wanting to tank thru 100 and serious downside momo i dont want to be long despite these 'compelling' valuations.