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HollyFrontier’s Stock Performance before Its Q1 Earnings

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HollyFrontier stock compared to SPY and WTI

HollyFrontier (HFC) stock has fallen 5.5% since January 2—the beginning of the first quarter. During the same period, the SPDR S&P 500 ETF (SPY), the broader market indicator, and WTI, the benchmark oil, have risen. SPY has risen 15.9%, while WTI has risen 36.2% in the current year.

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Why did HollyFrontier stock fall?

The decline in HollyFrontier stock is likely due to the weaker refining environment. Refining crack indicators and oil spreads have narrowed in the quarter.

HollyFrontier regularly posts regional refining index values, which point towards the current refining environment. While the index value in the Midcon and Rockies has fallen year-over-year, it has risen in Southwest. The Midcon and Rockies accounted for 74% of the company’s total crude throughput in 2018.

Oil spreads also impact HollyFrontier’s refining margin. The Canadian oil spread and the Midland oil spread have narrowed in the first quarter. The Canadian differential was lower due to production cuts implemented by the Government of Alberta and the Gulf Coast’s higher demand for heavy crude.

The Midland spread also fell. At the beginning of the year, the spread was at $5.3 per barrel. However, the spread fell to $0.6 per barrel at the end of the first quarter. New pipelines started sooner than expected in the region. The pipelines started easing the infrastructure issues, which allowed crude to be transported out of the Permian region and diminished the spread.

Lower index values and oil spreads point to a possibly weaker refining margin for HollyFrontier in the first quarter. The outlook has impacted HollyFrontier stock in the quarter.

Peers’ stock performance

Since January 2, Valero Energy (VLO), Phillips 66 (PSX), and Marathon Petroleum (MPC) have risen 16.0%, 9.2%, and 1.5%, respectively. However, PBF Energy (PBF) fell 4.1% during the same period.

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