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Why Has Delek Stock Risen 9% in Q2?

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Jun. 26 2019, Published 1:26 p.m. ET

Delek stock compared to SPY

In the second quarter, Delek US Holdings (DK) stock has risen 9%. During the same period, equity markets, represented by the SPDR S&P 500 ETF (SPY), have risen 5%.

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Delek stock rose

Delek stock has risen in June following a sharp fall in May. SPY has also followed a similar trend.

In May, Delek stock fell 17%, while SPY fell 6%. The fall was led by the escalating US-China trade war and rising tension between the US and Mexico. In June, the US-Mexico issue eased and investors expected the Fed to cut interest rates. SPY recovered 7%, while Delek rose 30% in June. Marathon Petroleum (MPC), Valero Energy (VLO), and Phillips 66 (PSX) have risen 13%, 13%, and 12%, respectively, in June. HollyFrontier (HFC) has risen 15% in June.

In the second quarter, Delek posted its first-quarter earnings, which beat analysts’ estimate.

Improving refining conditions in the second quarter would have impacted Delek stock. The USGC WTI 3-2-1, the benchmark crack, has risen 9% YoY to $20 per barrel in the second quarter. The increase points toward the rise in industry refining cracks. Marathon Petroleum (MPC) and HollyFrontier’s (HFC) refining margin indicators also imply strong cracks YoY in the second quarter.

However, oil spreads like the WTI Cushing-WTI Midland have narrowed in the second quarter. The narrow spreads could dent refiners’ earnings, which are positioned to take advantage of the oil spreads.

Overall

Delek stock has risen in the second quarter due to the rising equity market, recovering refining cracks, and better-than-expected first-quarter earnings. However, narrower oil spreads partly offset the stock’s gains.

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