U.S. Markets closed

The Zacks Analyst Blog Highlights: Royal Dutch Shell, Valero Energy, Chevron, Exxon Mobil and TOTAL

Zacks Equity Research
The acquisition of Alberta gas properties from Shell (RDS.A) is likely to allow Pieridae to use the output as Goldboro LNG feedstock.

For Immediate Release

Chicago, IL – June 7, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Royal Dutch Shell plc RDS.A, Valero Energy Corp. VLO, Chevron Corp. CVX, Exxon Mobil Corp. XOM and TOTAL S.A. TOT.

Here are highlights from Thursday’s Analyst Blog:

Why Trump’s Tariff Threat on Mexico Is Bad News for U.S. Refiners

With the United States planning to impose tariff on Mexican imports, refiners’ access to alternative heavy crude for the production of petroleum products is getting limited, said Sandy Fielden of Morningstar.  

It seems like there are reasons for energy investors to be concerned since the probable tariff might hurt domestic refiners in two ways.

US Plans to Slap Tariffs on Mexico

The United States is now planning to slap a 5% tariff on all goods being imported from Mexico. The rate is set to kick in by Jun 10 and will scale to as high as 25% by Oct 1, vows Trump.

The tariff program will stay in place until an immediate and urgent action is taken by Mexico to restrict the rising inflow of illegal immigration across the southern border.

US Refiners in Trouble

Rise in Input Cost

Per Reuters, the United States imports 600,000 to 700,000 barrels of oil from Mexico on a daily basis. Hence, a tariff against Mexico will hurt profits of U.S. refiners since the cost of buying Maya crude will rise. Notably, the cost of Maya oil will jump by roughly $3 a barrel, following a 5% tariff, which could halve the profit margin of American refiners, according to Bloomberg.

Investors should also know that the tariff implementation could raise the shipping cost for refiners in America if domestic refiners start purchasing heavier oil from producers far away.

Possibility of Mexico’s Retaliation

Moreover, the possibility of Mexico’s retaliation will hurt U.S. refiners as Mexico is the largest buyer of American crude and fuel in the world. Every day, the United States exports more than 1 million barrels of oil and fuel products to Mexico, per Reuters.

Which Refiners Will Suffer the Most?

Tariff action on Mexico will hurt key refiners importing significant Maya crude oil volumes. Here is a list of refiners which are likely to get affected the most.

According the U.S. Energy Information Administration (EIA), Royal Dutch Shell plc imported the highest volumes of crude from Mexico in February. The company, carrying a Zacks Rank #3 (Hold), imported 148 thousand barrels per day (MBbl/D) during the month, added EIA.

Valero Energy Corp. and Chevron Corp. are the second and third largest importers of Maya crude, accounting for 113 MBbl/D and 108 MBbl/D in February, respectively, per EIA. Other major refiners importing Mexican oil are Exxon Mobil Corp. and TOTAL S.A. These refiners imported respective volumes of 70 MBbl/D, 37 MBbl/D and 35 MBbl/D in February — according to EIA.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.     

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.  

See the pot trades we're targeting>>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com                                   

https://www.zacks.com                                                 

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.