In Which Direction Are Valero’s Oil Spreads Going in 2Q16?

Valero Energy’s (VLO) refining margins are impacted by the following:

• Brent-ANS[1. Alaskan North Slope] crude oil spread in the USWC[2. US West Coast] region
• Brent-WTI[3. West Texas Intermediate] spread in the Midcon[4. US Mid-Continent] region
• Brent-Maya
• Brent-ASCI[5. Argus Sour Crude Index]
• Brent-LLS[6. Louisiana Light Sweet] crude oil spreads in the USGC[7. US Gulf Coast] region

Oil spreads play a vital role in determining VLO’s refining margin. The higher the spread, the better it is for Valero. In 2Q16, spreads have shown a mixed trend. The Brent-Maya and the Brent-ANS spreads have widened in 2Q16 compared to 1Q16. The other spreads have narrowed during the same period.

A refiner’s margins are impacted by several oil spreads. Delek US Holdings’ (DK) refining margins are impacted by the Midland WTI-Cushing WTI spread. The WTI-Maya and the WTI-WCS[8. Western Canadian Select crude oil] spreads impact Phillips 66’s (PSX) margins.

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