Western Refining Stock Lost 24% Since March 2016: Why?



WNR’s stock stayed rangebound from February to December 2015

Western Refining stock (WNR) stayed in the range of $40 to $50 per share from mid-February 2015 to mid-December 2015. During this period, WNR announced a rise in its quarterly dividend and authorized an additional $200 million share repurchase program. Plus, WNR entered into a dropdown transaction with Western Refining Logistics (WNRL) for $180 million. WNR’s 50-day moving average crossed over and remained above its 200-day moving average during this period.

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WNR’s stock, amid volatility, fell since December 2015

WNR’s stock started falling in December 2015 on the news of the abolition of the crude oil export ban in the United States. The news raised fears of a fall in US refineries’ refining margins.

However, the stock saw a positive spike at the end of December on the news of a definitive merger agreement with Northern Tier Energy (NTI). But this spike was short-lived, and the stock resumed its downfall. The swelling inventory levels of refined products, coupled with a narrowing crack spread, put further pressure on the stock.

Western Refining (WNR) again rose from mid-February to the end of March, led by strengthening refining cracks. However, since April 2016, cracks have shown a mixed trend. Some areas have been showing weakness and some remaining flat. WNR posted lower-than-estimated 1Q16 earnings, which likely pressured the stock.

WNR’s stock and peer’s performance since March 2016

In fact, since March 22, 2016, Western Refining (WNR) lost 24% of its stock value. During the same period, WNR’s peers PBF Energy (PBF) and Alon USA Energy (ALJ) fell by 16% and 28%, respectively.

WNR is currently trading below its 50-day and 200-day moving averages. For exposure to refining sector stocks, you could consider the iShares U.S. Oil & Gas Exploration & Production ETF (IEO), which has ~22% exposure to the sector.


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