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UPDATE 1-Simmons upgrades U.S. refiners on cheaper WTI
February 14, 2011 / 4:55 PM / in 7 years

UPDATE 1-Simmons upgrades U.S. refiners on cheaper WTI

* Price trend seen persisting

* Refining stocks trading higher

HOUSTON, Feb 14 (Reuters) - Refining companies including Holly Corp HOC.N and Frontier Oil FTO.N that source feedstocks priced off cheaper WTI crude oil are poised to benefit in coming months, analysts at Simmons & Co said in a note upgrading their investment ratings on the stocks.

“We have effectively identified the trend in WTI price weakness, consistently highlighting expectations for Midwest refiners that consume crudes that are priced off of WTI to outperform other regions for more than six months,” Simmons said in the note released on Monday.

“Our thesis is playing out, in fact more rapidly and pronounced than originally expected,” the Houston-based energy investment bank said.

So far in 2011, WTI’s discount to Brent crude has averaged $8.25 per barrel, Simmons said, a trend that is likely to continue as Midwest crude markets remain oversupplied while refining and pipeline takeaway capacity growth is stagnant.

Simmons raised its investment ratings on Holly, Tesoro Corp TSO.N, Western Refining Inc WNR.N, Delek US (DK.N), Frontier Oil Corp FTO.N, Alson USA Energy ALJ.N, CVR Energy (CVI.N).

The Standard & Poor’s 1500 Oil and Gas Refining and Marketing index .15GSPENRM was up 2.2 percent in late morning trading.

Holly shares were up 3.4 percent and Frontier Oil shares were up 5.5 percent. (Reporting by Anna Driver in Houston, editing by Matthew Lewis)

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