I came back from church today and filled up my car. RF is an avid Dr. Pepper fan, so I swiped my card, put the trigger in and let it roll, while I went to get a soda. After getting my soda, I came back to my car and put the trigger back, to notice that my gas bill at $39! Given that I was on empty, it normally costs $30-32 to fill it up! I immediately balled up the reciept, threw in my car, and came home to research this.
After being killed for a while, both gas station owners and refiners are out to "milk" us. Right now, the wholesale gasoline futures are about $1.75 a gallon. In terms of oil price per gallon, it is about $1.45-1.50 per gallon, representing a "crack spread" of about $.25 margin per gallon! Before, refiners had negative margins and were lucky to get a few cents, now they are trying to push as many gallons through as possible, with these 17% margins! If this can hold, which I believe it can, it's time to get long refiners for a "trade" not "investment".
Refiners do not have strong fundamentals; however, many are heavily shorted and a squeeze can occur. My refining list is below, play with stops!
ALJ = 14.44% short interest
DK = 11% short interest
FTO = 4.9% short interest
MRO = 1.4% short interest
TSO = 12.8% short interest
VLO = 2.9% short interest
WNR = 13.5% short interest
Top Pick: WNR (former RF favorite since March at $10)
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