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Has Short Interest in MPC Risen in 1Q18?

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Short interest in MPC

Marathon Petroleum (MPC) has seen a rise in its short interest (as a percentage of outstanding shares) from 1.5% on January 2, 2018, to the current level of 1.7%. This implies that bearish sentiments on the stock have increased. Over the same period, Marathon Petroleum stock has risen 0.7%.

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Why the rise in bearish sentiment?

Bearish sentiments in MPC stock may have risen due to the trend in MPC’s refining earnings indicators.

MPC’s refining earnings indicators are the blended LLS (Louisiana Light Sweet) 6-3-2-1 crack, the LLS-WTI (Louisiana Light Sweet–West Texas Intermediate) spread, and the sweet-sour differential. Per MPC, a dollar-per-barrel change in the blended LLS 6-3-2-1 crack spread, the sweet-sour differential, and the LLS-WTI spread would change its annual net income by $450 million, $220 million, and $90 million, respectively.

According to MPC, in 1Q18 so far, the blended LLS crack has slipped by $2.0 per barrel over 4Q17 to $7.7 per barrel. The LLS-WTI spread has also fallen $2.4 per barrel compared to 4Q17. However, the sweet-sour differential has risen $0.8 per barrel over 4Q17 to $6.9 per barrel in 1Q18 quarter-to-date. 

The rise in the sweet-sour differential could be offset by the falls in the blended LLS crack and the LLS-WTI spread quarter-over-quarter. Thus, the situation points toward a likely fall in MPC’s refining earnings in 1Q18 over 4Q17.

Peers’ short interests

MPC’s peer Phillips 66 (PSX) has also seen a 0.1% rise in its short interest since January 2, 2018. Short interest in PSX currently stands at 1.3%. In the same period, Phillips 66’s stock price has fallen 7.4%.

However, peers HollyFrontier (HFC), PBF Energy (PBF), and Delek US Holdings (DK) have witnessed falls in their short interests by 0.4%, 1.7%, and 0.6%, respectively, since January 2. Currently, short interests in HFC, PBF, and DK stand at 5.2%, 7.3%, and 7.7%, respectively. In the stated period, HFC and PBF have fallen 12.4% and 12.5%, respectively. DK has risen 0.6% since January 2.

Move on to the next article to learn about where MPC’s forward valuation stands compared to its peers’.

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