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Did Refining Stocks’ Short Interest Fall in Q2?

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Refining stocks’ short interest

The short interest in Marathon Petroleum (MPC), Valero Energy (VLO), and Phillips 66 (PSX) has put up mixed trend since April 1. While the short interest in Marathon Petroleum, Valero Energy, and HollyFrontier has fallen, it has risen in Phillips 66.

The short interest in Phillips 66 stock has risen by 0.11 percentage points since April 1 to the current level of 1.45%. During the same period, the short interest in Marathon Petroleum (MPC) and HollyFrontier (HFC) has fallen by 0.19 percentage points and 0.97 percentage points to 1.01% and 3.71%, respectively. The short interest in Valero Energy has fallen by 0.03 percentage points to 1.61%.

Since April 1, Valero Energy stock has risen by 0.8%. Marathon Petroleum and HollyFrontier have fallen 11.7% and 9.3%, respectively, since April 1. Phillips 66 has fallen 7.2%.

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Why did the short interest fall?

Usually, a decline in the short interest points toward a rise in the positive sentiments for a stock. The sentiments in refining stocks could have improved due to the recovering refining environment.

In the second quarter, the US Gulf Coast WTI 3-2-1 crack has risen ~11% YoY. The crack shows refiners’ earnings when they process three barrels of crude oil WTI to make two barrels of gasoline and one barrel of distillate. Usually, a higher crack means better refining margins and earnings. An expectation of better earnings could have led to a rise in the positive sentiment for these stocks.

However, oil spreads are lower year-over-year in the second quarter, which could impact refiners’ margins and earnings. The narrowing oil spread could have partially offset the rise in the positive sentiments in these stocks.

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