For Immediate Release
Chicago, IL – January 8, 2010 – 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: Sunoco Inc. (SUN), Valero Energy Corp. (VLO), Western Refining Inc. (WNR), Chevron Corp. (CVX) and Marathon Oil Corp. (MRO).
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Here are highlights from Thursday’s Analyst Blog:
Surprise Build in Crude Inventories
The larger-than-anticipated buildup in oil and gasoline supplies has again raised concerns about the U.S. crude demand and the sluggish pace of a global economic recovery. As a result, following the EIA release, oil prices pulled back below $83 a barrel after settling near 15-month high a day earlier.
The specter of a continued glut in global fuel supplies still weighs and all of the inventories remain higher compared to averages for this time of year. As a result, we are not fully convinced about the sustainability of crude oil’s current gains, which have staged a remarkable rally in 2009, increasing more than 75% (following a 54% dip in 2008). In particular, the drop in petroleum stocks over the last few weeks have been triggered by weak refinery activity and falling imports rather than a much awaited fundamental improvement in oil demand that has remained largely unchanged.
As such, we prefer to maintain our cautious stance on oil refiners like Sunoco Inc. (SUN), Valero Energy Corp. (VLO) and Western Refining Inc. (WNR), given that the overall environment for refining margins is likely to remain poor going into 2010. The sharply lower refinery utilization (at just 79.9% of capacity) provides enough evidence that refineries are cutting back on production because the economy is still struggling on the demand side.
Companies like Chevron Corp. (CVX) and Marathon Oil Corp. (MRO) – oil majors that have significant refining operations – are also expected to remain under pressure until pricing and demand improve. The companies recently announced reduction in their 2010 capital budget with a larger percentage of funds allocated towards the Exploration & Production (E&P) segment as against the under-pressure refining business.
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