The brent spread collapsed. Refiners were lucky to hold on as long as they did. They ran up 40%, but have only given back 10%, even though the brent spread is lower than at the start of the year. There is no telling how low they could fall really. The business is worse than the start of the year. Believe it or not. Brent spread lower. EPA regulations tougher. and that ethanol credit thing. Plus commodity sector is under attack. As crazy as it sounds, refiners could be a ground floor short still. Another 10% down probably if the market corrects some too. But probably they don't fall too much more. But it makes sense for them too.
Okay finally something - it appears the EPA's request for 4 years from now is affecting the refiners.
Also today our friend analyst Chi Chow of Macquarie lowered his outlook for several refiners.
"We are adjusting most of our 1Q13 EPS estimates downward as fundamentals began to weaken in mid-Mar 2013. We are lowering our EPS projections for Tesoro and Valero Energy the most. For TSO, we lower our estimate to US$0.73 from US$1.01 based in part on higher expected G&A costs, while we lower our VLO estimate to US$0.99 from US$1.36 largely on turnaround and maintenance impacts."
Should be interesting to see if he is right or not... IMHO, the refiners are going to do better than he thinks...