In recent quarters, fuel margins for companies in the Zacks Oil and Gas - Refining & Marketing industry have declined, falling significantly below the peak levels seen in 2022. Although strong demand and light product inventories should continue to support the sector, most operators anticipate subdued margins for the remainder of 2024. Rising costs due to persistent inflation are further squeezing profits.
Refining margins, while still healthy, have weakened from the exceptional highs of 2022, with crack spreads narrowing due to lower refined product prices relative to crude oil.
Despite sanctions and price controls causing market disruptions, refiners may still benefit from robust gasoline and distillate demand trends, pointing to potential resilience in certain sectors.
For those interested in the space, we have earmarked three stocks - Valero Energy, Murphy USA and Galp Energia, which may offer investment opportunities despite the challenging market conditions.
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