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Marathon Petroleum Stock: The Impact of Hurricane Harvey

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Marathon Petroleum stock performance

Since July 3, 2017, Marathon Petroleum (MPC) stock has risen 3.7%, outperforming the SPDR S&P 500 ETF (SPY), the overall market indicator. SPY has risen 2.5% in the same period. MPC’s peer Andeavor (ANDV) has risen sharply by 9.2% since July 3, 2017. Valero Energy (VLO) and Phillips 66 (PSX) have risen 2.6% and 2.1%, respectively, in the quarter so far.

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Marathon Petroleum stock in 3Q17

In 3Q17, Marathon Petroleum stock has risen, most likely due to Hurricane Harvey that hit Texas on August 25, 2017. Harvey impacted around 30.0% of refining capacities in the United States. It also impacted Marathon Petroleum’s Texas City and Galveston Bay refineries.

Gasoline prices have risen sharply due to the fear of a huge fall in gasoline production going forward. Refining cracks have strengthened. Refiners are now trying to postpone their scheduled maintenance activities to take advantage of the stronger refining cracks. MPC delayed its planned maintenance at the Catlettsburg, Kentucky, refinery for a week. Harvey could be an important factor that leads to a surge in refining stocks.

The EIA (U.S. Energy Information Administration) reported a fall of 3.1% in gasoline inventory for the week ended August 25, 2017, over the week ended June 30, 2017. Distillate inventory also fell 0.80% in the same period. However, the fall will be steeper in the EIA’s upcoming data, which will capture the impact of Hurricane Harvey.

In the third quarter, MPC’s refining earnings indicator, blended LLS (Lousiana Light Sweet) 6-3-2-1 crack, has risen year-over-year as well as quarter-over-quarter. That could result in higher refining earnings for MPC in 3Q17. In the third quarter, MPC’s refining earnings indicator, blended LLS 6-3-2-1 crack, has risen year-over-year as well as quarter-over-quarter. That could result in higher refining earnings for MPC in 3Q17. MPC completed its second drop-down of midstream assets to MPLX, its MLP, according to the strategic plan in the current quarter. We covered this in the previous part of this series.

MPC recently posted its 2Q17 earnings, showing that the company’s net income plunged due to a decline in its refining segment’s operating earnings. For more on this, please refer to Marathon Petroleum’s 2Q17 Earnings Missed Estimates. Marathon Petroleum stock shed its gains after the earnings release.

Overall, MPC stock has risen in 3Q17 to date due to the impact of Hurricane Harvey, higher MPC refining earnings indicators, the execution of its strategic plan, and a decline in gasoline and distillate inventories. However, MPC’s lower 2Q17 numbers partially offset the rise.

In the next part, let’s review MPC’s moving averages.

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