Oil & Gas - Energy - Commodities - Resources (OILBRENT)

[Timothy Smith]

Refining Outlook

2013 was clearly another solid year for US refining given the following events:

A WTI-Brent spread of nearly -US$11/bbl, which admittedly is narrower than last year’s level of -US$17.86 but still well wider than historical levels,

An LLS-Brent spread that stood at -US$8/bbl yesterday,

An increase in gasoline and diesel exports of +8% compared to last year,

An encouraging resolution to the 2014 RFS blending requirement for ethanol,

Solid Brent-based crack spreads, with diesel up YoY while gasoline is slightly down, and finally,

Decent stock performance for refiners (+19%), although lagging both the S&P 500 (+27%) and the Russell 2000 (+36%).