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Investors Favor Mid-Cap Refiners as Sector Fundamentals Strengthen, TPH Energy Says

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Refining investors remain optimistic as stronger fuel margins, supportive market fundamentals and geopolitical developments continue to strengthen the sector, TPH Energy said in a Friday note.

TPH Energy said investors showed the most interest in mid-cap refiners Delek US Holdings (DK), HF Sinclair (DINO) and Par Pacific Holdings (PARR), while Phillips 66 (PSX) and Valero Energy (VLO) attracted the most attention among large-cap companies.

Investors focused on the breakdown of the US-Iran memorandum of understanding, which boosted gasoline and diesel refining margins, while also watching Ukrainian drone strikes on Russian refineries, a recovery in Chinese refining activity and low fuel inventories, TPH Energy said.

Market participants also examined regional refining trends, including weaker Midwest gasoline margins compared with the Gulf Coast during the summer, along with Western Canadian Select takeaway constraints, the note added.

Investors also highlighted potential benefits from Small Refinery Exemptions for Delek US Holdings, Par Pacific Holdings and HF Sinclair, the note said.

TPH Energy also expects Marathon Petroleum (MPC), Valero Energy, HF Sinclair, Delek US Holdings and Par Pacific Holdings to generate enough cash in the first half to support significant shareholder returns in the second half of 2026.

Price: $55.66, Change: $-0.43, Percent Change: -0.77%

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