18 May

Did Trump Trade’s Unwinding Halt Marathon’s Rally?

WRITTEN BY Maitali Ramkumar

Marathon Petroleum’s stock performance in 2Q17

Since April 3, 2017, Marathon Petroleum (MPC) has risen 4%, the highest among its peers Tesoro (TSO), Valero Energy (VLO), and Phillips 66 (PSX). TSO has risen 2%, but VLO and PSX have fallen 4% and 1%, respectively, so far in 2Q17.

Did Trump Trade’s Unwinding Halt Marathon’s Rally?

The unwinding of Trump trade

So far in 2Q17, the SPDR S&P 500 ETF (SPY), the broader market indicator, has been flat. The ETF has ~6% exposure to energy sector stocks, including MPC, TSO, VLO, and PSX.

SPY’s flattish performance in 2Q17 has been due to a fall in its value. SPY fell 1.8% on May 17 amid recent turmoil in President Donald Trump’s presidency. Marathon Petroleum stock fell 0.8% on May 17. Comparatively, MPC’s peers VLO and PSX fell 1.1% each, and TSO closed flat on the day.

Why did Marathon Petroleum stock rise in 2Q17?

Various factors affect refining stocks. Some of the primary ones are geographical cracks, spreads, and refined product inventory levels.

Marathon Petroleum’s refining margin indicators have risen sequentially in the second quarter so far, pointing toward better refining margins for MPC in 2Q17 compared to 1Q17. MPC’s blended 6-3-2-1 crack rose from $7.7 per barrel in 1Q17 to $9.8 per barrel in 2Q17. Plus, the LLS-WTI (Louisiana Light Sweet–West Texas Intermediate) differential has widened in 2Q17 over 1Q17, pointing toward a better refining environment for MPC in 2Q17.

On April 27, 2017, MPC posted its 1Q17 earnings. Marathon Petroleum posted a profit in 1Q17 instead of the consensus loss that was expected by Wall Street analysts. For more on this, read Marathon Petroleum’s 1Q17 Earnings Beat Estimates.

Plus, the EIA (U.S. Energy Information Administration) reported a fall in gasoline and distillate inventories for the week ended May 5, 2017.

In 2Q17, Marathon Petroleum stock rose likely due to a rise in its refining margin indicators, a fall in gasoline and distillate inventory levels, and its better 1Q17 earnings.

Series outline

This series will update you on MPC’s market performance in 2Q17. In the coming articles, we’ll examine MPC’s moving averages, analyst ratings, dividend yield, PEG ratio, valuations, beta status, short interest moves, institutional ownership shifts, and implied volatility changes. We’ll also look at its correlation to oil.

In the next article, we’ll discuss whether Marathon Petroleum stock has moved above its 50-day and 200-day moving averages.

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