Crude oil refiners expected to benefit over the long term
Crude oil prices seemed to have found a support at $60 per barrel, but as the past week has shown, this was a short-term level. Refiners such as Phillips 66 (PSX), Tesoro (TSO), Valero Energy (VLO), and Marathon Petroleum (MPC) tend to benefit from lower levels of crude prices.
PSX is suitably diversified and thus is less likely to be impacted by climbing crude prices. The anticipated addition to global oil supply as an outcome of an amicable resolution to talks with Iran is expected to push oil prices lower, potentially boding well for US refiners. Investors who wish to obtain exposure to the energy sector could consider investing in the iShares U.S. Energy ETF (IYE).
Additionally, weak manufacturing data from China and Japan could impose a ceiling to oil prices. Owing to divided sentiment among investors regarding the degree to which the output of oil-producing countries could be curbed by lower oil prices, there has been a relatively narrow range over which oil prices have been trading in recent months. Plus, with higher oil prices seeming more unlikely, the volatility of crude oil prices has fallen to 30% in the last week, from 38% earlier in June.