|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||0.00 - 0.00|
|52 Week Range|
|PE Ratio (TTM)||10.54|
|Forward Dividend & Yield||1.84 (2.62%)|
|1y Target Est||N/A|
Short interest is low for MPC with fewer than 5% of shares on loan. The last change in the short interest score occurred more than 1 month ago and implies that there has been little change in sentiment among investors who seek to profit from falling equity prices. Over the last one-month, outflows of investor capital in ETFs holding MPC totaled $1.17 billion.
US crude oil exports fell 28% to 1,461,000 bpd (barrels per day) last week, but rose by 733,000 bpd (101%) YoY (year-over-year) due to the oil export ban being lifted, domestic oil production rising, and the Brent-WTI spread widening.
Yesterday, the EIA (U.S. Energy Information Administration) released its oil inventory report. It reported that US crude oil inventories increased by 5.8 MMbbls (million barrels) to 411 MMbbls between July 6 and 13, but fell by ~80 MMbbls (16.2%) YoY (year-over-year). A Reuters survey had earlier estimated that US crude oil inventories fell 3.6 MMbbls last week.
The API (American Petroleum Institute) released its oil and gasoline inventory report on July 17 after the post-settlement trade. The API estimated that US crude oil inventories rose by 0.6 MMbbls (million barrels) to 410.7 MMbbls on July 6–13. However, Reuters estimates that US oil inventories could have fallen by 3.6 MMbbls last week. August WTI oil futures contracts fell 0.7% in the early morning trading on July 18.
Hedge funds’ net bullish positions in US crude oil futures and options decreased 0.1% to 433,938 on July 3–10. However, the positions are near the highest level since April 17. The positions increased by 255,284 contracts or 143% YoY (year-over-year). Hedge funds’ net bullish positions in US crude oil futures and options suggests that they remain bullish towards oil prices.
WTI crude oil prices hit $74.15 per barrel on June 29—the highest level since November 2014. However, Brent and WTI oil prices fell 5.2% and 4.2%, respectively, during the last two weeks. WTI oil prices fell 3.8% last week. However, the Energy Select Sector SPDR ETF (XLE) rose 0.8% last week. The companies in XLE develop and produce crude oil and natural gas and other energy-related services.
Phillips 66 (PSX) is expected to post its Q2 2018 results on July 27. Before we proceed with the Q2 2018 estimates, let’s recap PSX’s Q1 2018 performance versus expectations.
Tim Plaehn, an income specialist and editor of The Dividend Hunter, believes midstream energy master limited partnerships are near the start of a multi-year recovery. George Putnam, editor of The Turnaround Letter, also sees a brighter long-term future for select MLPs. Like many stocks in the energy sector, master limited partnerships, or MLPs, remain out of favor.
Since April 30, Marathon Petroleum’s (MPC) short interest as a percentage of outstanding shares has risen from 2.2% to 4.9%, implying increased bearishness. Over the same period, Marathon Petroleum stock has fallen 11.8%.
Steep decline in imports, partly due to an outage at Syncrude facility in Canada, led to the massive stockpile draw with the world's biggest oil consumer.
Marathon Petroleum’s (MPC) dividend payments have been increasing steadily over the past several quarters. Between Q2 2016 and Q2 2018, MPC’s dividend payment rose 44% to $0.46 per share. Its latest dividend was announced on April 25 and paid on June 11.
US crude oil exports decreased 13.2% to 2,027,000 bpd (barrels per day) on June 29–July 6. However, the exports increased by 1,109,000 bpd or 121% from a year ago. The year-over-year rise in exports was due to the lifting of oil export ban, a rise in US oil production, and a wider Brent-WTI spread.
Let’s now look at Marathon Petroleum’s (MPC) analyst ratings. Of the 14 analysts covering the stock, 12 (86%) recommend “buy” or “strong buy,” and two recommend “hold.” Their mean target price for the stock is $98, which implies a 36% gain from its current price.
Let’s now forecast Marathon Petroleum’s (MPC) stock price up until July 26, when the company is expected to post its Q2 2018 earnings. We’ll use its implied volatility, which has risen by 2.9 percentage points in the past month to 30.5%. Assuming a normal distribution of prices, standard deviation of one, and probability of 68.2%, Marathon stock could close between $76.50 and $67.10 in the next 17 calendar days.
In Q1 2018, Marathon Petroleum’s (MPC) refining segment’s operating loss expanded to $133 million from $70 million due to the dropdown of assets to MPLX (MPLX), MPC’s MLP. Also, MPC’s gross refining and marketing margin contracted YoY (year-over-year) by $1.10 to $10.60 per barrel, primarily due to a narrower blended LLS (Louisiana Light Sweet) 6-3-2-1 crack.
Marathon Petroleum (MPC) is anticipated to post its Q2 2018 results on July 26. Before we look at what’s expected from MPC in Q2, let’s review MPC’s Q1 2018 performance.
Institutional ownership in Marathon Petroleum (MPC), Andeavor (ANDV), Valero Energy (VLO), and Phillips 66 (PSX) stands above 70.0%. Institutional ownership is the highest in ANDV, standing at ~84.0%. The lowest institutional ownership is in PSX, standing at ~71.0%. Institutional ownership in MPC and VLO stands at ~83.0% and ~81.0%, respectively.
On July 5, the EIA (U.S. Energy Information Administration) released its weekly crude oil inventory report. The EIA reported that US crude oil inventories increased by 1.3 MMbbls (million barrels) to 417.9 MMbbls on June 22–29. However, the inventories decreased by 85 MMbbls or 16.9% YoY (year-over-year). A Bloomberg survey estimated that US crude oil inventories could have declined by 4.5 MMbbls on June 22–29.
Short interest (the percentage of outstanding shares) in Marathon Petroleum (MPC), Andeavor (ANDV), Valero Energy (VLO), and Phillips 66 (PSX) have demonstrated a mixed trend since March 29. While the short interest in ANDV fell, it rose in MPC, VLO, and PSX during this period.
In the previous part, we saw that Marathon Petroleum’s (MPC) valuations switched from premium to discount. However, Andeavor’s (ANDV) valuations have surged. MPC announced the acquisition of ANDV on April 30.
MPLX’s (MPLX) DCF (distributable cash flow) grew 43% in 2017 over 2016—the highest growth among the four MLPs that we’re discussing in this series. The growth was driven by contributions from logistics and storage assets acquired from Marathon Petroleum (MPC). MPLX acquired assets from Marathon Petroleum in February. The acquired assets and growth projects should continue to drive the company’s future earnings growth.
In the previous part, we discussed the dividend yield trends of the four refining stocks in our survey. Now, we’ll look at the forward valuations of refiners Marathon Petroleum (MPC), Andeavor (ANDV), Valero Energy (VLO), and Phillips 66 (PSX).