Pump prices continue to move higher, boosting outlook for US refiners (NYSEARCA:USO)

The price of gasoline in the US has 12% increase in the past month averaged $3.51 a gallon on Jan. 28, according to AAA, threatening the Federal Reserve’s fight against inflation and potentially prolonging last year’s big rally in equities. of oil refineries.

Although December’s winter storms contributed to a drop in supply, January’s mild weather could prompt more drivers to drive, pushing up pump prices, AAA added. Oil costs have been supported by market optimism that global oil demand will be stronger than expected in 2023 as the Chinese economy reopens.

Following a “seasonal anomaly pattern”, gas prices edged higher throughout January,” Bespoke Investment Group said. “Whereas prices have previously averaged less than 1%” year-to-date through January 26, “this year the increase is 9.16% .”

Gasoline exports have nearly doubled from a year ago, and China’s reopening means more people use the fuel.

Diesel is bouncing back to 2022 highs, with the spread exceeding $60 per barrel in the past week, from $50 per barrel in November and $25 per barrel a year ago; diesel could increase further when Europe bans Russian oil products starting February 5.

Companies have shut down more refineries for maintenance in recent weeks; With less fuel coming to market, prices are going up.

“We see Favorable rebuilding for US refineries“, Bank of America analyst Doug Leggate believes, backing Valero Energy (VLO), Energy PBF (PBF) and Marathon Petroleum (MPC).

ETFs: (NYSEARCA:USO), (NYSEARCA:UGA), (NYSEARCA:CRY)

Valero (VLO) was the first of the major refineries to report Q4 earnings this week, easily beat Wall Street estimates.