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FINWIRES

Refiners Outperform Broader Market on Stronger Fuel Margins, TPH Energy Says

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Renewed Middle East supply concerns boosted refining equities and fuel margins last week, while second-quarter refining fundamentals continued to improve, TPH Energy said in a Monday note.

US refining stocks climbed 7.6% last week, outperforming the S&P 500's 2.0% decline after tensions between the US and Iran intensified. The note cited Iran's strike on a cargo ship and the US response targeting drone and missile storage sites.

Among refiners, PBF Energy (PBF) gained 15.6%, Delek US Holdings (DK) rose 15.3%, and Valero Energy (VLO) advanced 9.8%. CVR Energy (CVI) fell 1.1% after unexpectedly replacing its chief executive officer, TPH Energy said.

Gasoline cracks strengthened across key regions, with US margins rising $6 per barrel to $32/bbl, Northwest Europe gaining $5/bbl to $29/bbl, Singapore increasing $1/bbl to $31/bbl, and 2026 gasoline futures climbing $1/bbl to $14/bbl, TPH said.

Diesel cracks also moved higher, as US margins increased $3/bbl to $38/bbl, Northwest Europe rose$7/bbl to $41/bbl, Singapore added $1/bbl to $42/bbl, and 2026 diesel futures advanced $2/bbl to $35/bbl, TPH added.

TPH expects second-quarter 2026 product cracks to post their strongest quarterly performance since the second quarter of 2022. US gasoline cracks are on pace to rise $16/bbl quarter over quarter to $25/bbl, while US diesel cracks are expected to increase $15/bbl to $45/bbl.

The Southwest posted the greatest improvement in refining margins, both quarter-over-quarter and year-over-year. The West Coast recorded the smallest quarterly gain, while the Mid-Continent showed the weakest year-over-year improvement, TPH said.

Higher crude differentials offset part of the stronger refining margins as several grades tightened against Brent. West Texas Intermediate tightened by $1/bbl, Louisiana Light Sweet by $2/bbl, Mars by $4/bbl, Maya by $3/bbl, Bakken by $7/bbl, Syncrude by $5/bbl, West Texas Sour by $2/bbl, and Alaska North Slope by $11/bbl, the company added.

Western Canadian Select widened by $4/bbl at Hardisty and $1/bbl at Houston. TPH also expects the West Texas Intermediate market structure to reduce the value of US inland barrels by $5/bbl during the second quarter.

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