Independent oil refiners are recording record profits driven by historically high crack spreads, with U.S. diesel prices reaching $6 per gallon for the first time ever. Global refining capacity expanded by 400,000 to 700,000 barrels per day over the past two years, while actual fuel production declined by approximately 5%, or about 4.2 million barrels per day. Geopolitical tensions in the Middle East and Russian drone strikes on processing facilities have created structural bottlenecks, with U.S. distillate inventories sitting 14% below the five-year average. Valero Energy, Marathon Petroleum and Phillips 66 have seen their shares surge between 38% and 145% year-to-date, reaching all-time highs. Despite bearish views that high prices will self-correct, analysts expect elevated cash flows to persist well into next year due to accumulated maintenance debt and logistics disruptions.
Source: Read the original article
