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Marathon Petroleum’s Short Interest in Q1

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Mar. 20 2019, Updated 12:08 p.m. ET

Short interest in Marathon Petroleum

So far in this series, we reviewed Marathon Petroleum’s (MPC) stock performance, moving averages, stock price forecast range, and dividend yield. We also discussed Marathon Petroleum’s institutional holdings. Now, we’ll discuss Marathon Petroleum’s short interest trend.

The short interest as a percentage of the outstanding shares in Marathon Petroleum has fallen from 1.4% on January 2 to the current level of 1.2%. Usually, a drop in the short interest means a decrease in the bearish sentiments for a stock. During the same period, Marathon Petroleum stock has risen 4%.

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Why did the short interest fall?

The short interest in Marathon Petroleum might have fallen due to the better earnings outlook driven by the integration of Andeavor’s assets. Since the acquisition closed, the company has enormous refining capacities, an extensive midstream network, and a vast chain of retail and marketing stations.

Marathon Petroleum could use the integrated network to take advantage of business conditions. The company can utilize its pipeline network to refine discounted Canadian crude oil, Permian oil, and Bakken oil in its refining system. With Andeavor’s refineries, Marathon Petroleum has more flexibility to refine sweet or sour crudes in its system. The retail network, which includes Andeavor’s retail assets, provides deeper penetration across the US. The dynamics across the value chain are expected to create tremendous synergies and earnings for the company.

Marathon Petroleum’s better-than-expected fourth-quarter earnings would have supported the positive sentiments for the stock.

Peers’ short interest

The short interest in Valero Energy (VLO) has fallen by 0.4 percentage points to the current level of 1.7%. The short interest in Phillips 66 (PSX) and HollyFrontier (HFC) has fallen by 0.1 percentage points and 0.2 percentage points, respectively, to the current levels of 1.3% and 4.7%, respectively. During the stated period, Valero Energy, Phillips 66, and HollyFrontier rose 15%, 12%, and 3%, respectively.

Next, we’ll discuss Marathon Petroleum’s forward valuations compared to its peers.

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