Short interest in Marathon Petroleum
The short interest in Marathon Petroleum has fallen from 1.4% on April 1 to the current level of 1.2%. Usually, a fall in the short interest means a decrease in the bearish sentiments for a stock. During the same period, Marathon Petroleum stock has fallen 20%.
Why did the short interest fall?
The short interest in Marathon Petroleum might have fallen due to recovering refining conditions.
Marathon Petroleum’s refining earnings are influenced by the blended crack, the sweet differential, and the sour differential. According to Marathon Petroleum, a dollar-per-barrel rise in the blended crack expands its annual net income by $900 million. A dollar-per-barrel shift in the sour differential and the sweet differential alters Marathon Petroleum’s yearly net income by $450 million and $370 million, respectively.
So far in the second quarter, the blended crack has risen by $4.1 per barrel YoY to $18.1 per barrel. However, the prompt sour differential and prompt sweet differential have narrowed by $5.9 per barrel YoY and $0.6 per barrel YoY in the second quarter.
Overall, the rise in the blended crack points towards a likely increase in Marathon Petroleum’s refining earnings YoY in the second quarter. Higher volumes led by the integration of Andeavor could support the company’s refining earnings in the quarter. However, the support could be partly offset by narrower sour and sweet differentials.
Peers’ short interest
The short interest in Valero Energy (VLO) has also fallen by 0.3 percentage points to the current level of 1.4%. The short interest in Phillips 66 (PSX) and HollyFrontier (HFC) has fallen by 0.2 percentage points and 1.2 percentage points, respectively, to the current levels of 1.3% and 3.7%. During the same period, Valero Energy, Phillips 66, and HollyFrontier have fallen 12.2%, 10.8%, and 18.7%, respectively.