Why Has Short Interest in Valero Fallen ahead of Earnings?

Short interest in Valero

Valero Energy (VLO) has seen a 1.4% fall in its short interest (as a percentage of outstanding shares) over October 2, 2017, to the current level of 3.5%, which implies that the bearish sentiment in the stock has fallen. During the same period, Valero stock rose 26.6%.

Why Has Short Interest in Valero Fallen ahead of Earnings?

What has affected Valero since October 2?

The most significant events that likely impacted VLO are its 3Q17 earnings, tax reforms, and rising oil prices. We discussed the impact of these events on Valero stock earlier in the series. These events have likely been instrumental in building up positive sentiment towards Valero stock.

Peers’ short interest

Valero’s peers Phillips 66 (PSX), HollyFrontier (HFC), and PBF Energy (PBF) have also witnessed a fall in their short interest since October 2. Short interest in PSX, HFC, and PBF fell 0.3%, 1.1%, and 8.3%, respectively, in the stated period. Currently, short interest in PSX, HFC, and PBF stand at 1.2%, 5.5%, and 9.0%, respectively. Since October 2, HFC and PBF stocks rose 45.2% and 29.1%, respectively. PSX also rose 14.9% in the same period.

So, in a trend similar to that seen in VLO, stocks of refining companies have surged, while bearish expectations surrounding the stocks have gone down ahead of the earnings season.