https://www.bloomberg.com/news/articles/2022-06-03/chevron-ceo-warns-not-to-count-on-new-us-oil-refinery

End of day, it”s stability which will be good for HY. Not the sharp volatility as it is detrimental to their hedging

Credit must be given to probability and otb for their efforts. Probability has shared some good insights.

Thanks for the facts Probability !

https://www.theedgemarkets.com/article/global-refiners-falter-efforts-keep-demand?type=malaysia

@ probability
What I was trying to explain is a sudden rise or spike in crude is very damaging to HY as it is very difficult to manage the hedging / future contracts and most time than not, u will have losses. A steady movement or flattish movement is easier to manage your hedges / future contracts

@otb

I think the worst is over for now. I suspect there will still be derivatives losses but to much smaller proportion. As I said , high crude oil prices does not translate to better profit for HY, in fact it can have negative impact. If you look at the past years, HY Makes more money not when crude is spiking so sharply but when crude is lower and stable. I prefer crude not to spike further but remain stable or even go lower . The key is of course the crack margin for their refined products .

As long as crack margin remains at this elevated value , I see Q2 PAT shd be at least 400-500mil ( after offseting derivatives due to hedging assuming crude does not spike too sharply )

There are basically 3 issues keeping crack margin so high:-
a) shortage of refining capacity in the world
b) demand for refined products and once China slowly opens up there economy, this shd increase demand further .
C) we are entering hurricane season and if a few refineries are hit in US, crack margin might have another spike .

Tq

Have a look at ORL.Ta share price ( Israeli refinery ) who posted a loss for 1st qtr due to derivatives . Share price is higher after merely a few days after the results

This is a wonderful opp for those who can see past this temporal setback. Downside risk is very minimal

Sonyx123,

It all depends on whether raw crude or refined prices move up faster. Sudden spike in short space of time makes it very difficult to have sufficient hedging. Imagine , if raw crude is spiking everyday , one would need to hedge frequently for their contracts to cover their delivery of their refined products. A Yo yo sharp movement for crude makes it even more difficult to hedge . If they feel crude is already too high, they could short but suddenly crude moves even higher causing their cost for delivery of refined products to spike and vice versa.

No, u cannot long the same contract but u can open a new contract

Hi Otb,

Just to clarity, there is a difference in options and future oil contracts.
Oil options do not require physical delivery at expiration, as is the case with some (but not all) crude oil futures contracts. In contrast, crude oil futures traded on the NYMEX require delivery at expiration. The trader short one futures contract must deliver 1,000 barrels of crude oil at the specified delivery point, while those with a long position must accept delivery.

If your case, if they short sell at usd13 and suddenly the price of diesel goes up, they would have to deliver at a certain date at the higher price / cover the short , hence losing money and vice versa.

@ probability

Share price of Israel’s Oil Refineries (ORL) (ORL.TA) also rebounded to higher levels in matter of 2-3 days

Mkt is foward looking . We shd buy looking towards better Q2

Can otb comment abt the results ?

rr88 so quiet ? I expect some noise from him

Must give credit to otb. When he is right, not many gives credit . When wrong, all come out to hentam.

Ya I agree. Probability gives facts and not just make comments simply . He deserves credit !

Last call, buy and forever hold you peace…..lol

Today c22 will be suspended

Going to break out soon to the upside !

Grab while cheap cheap

It’s time to start your engine

Time to nibble nibble

Hosay !

Best to nibble , don’t wait last minute as it can rebound very fast

Nibble nibble sikit

https://www.marketplace.org/2022/05/23/u-s-oil-refiners-margins-smash-records-but-few-plan-to-build-more-plants/amp/

If u understand what happen in 2017, hurricane Harvey caused shutdown of so many refineries and this caused the crack margin to spike . However , the shutdown only lasted a couple of months and once the refineries are back up, crack margin dropped and naturally HY share prices also follow suit. This time around it is very different , there is a shortage of world refining capacity due to many being shut and increased demand for refined products . This will be a protracted issue and will last maybe till end of year to more

We all hope so too !

Good results !

Very Interesting OTB!

Ok la. 6.60.

If 80cents EPS, I happy d

Add sikit sikit lama lama jadi bukit

Every forum also gaduh… why leh?

Good day to add . I add and add

Kasih support sikit … hahahaha

I top up at 7.11, 7.15

Slowly but surely

Adios rr88. RIP

No fruit juice means no Vit C ! We need you apple !

You are my sunshine apple ! No apple means no fruit juice

We love you apple !

Slowly but surely naik naik

https://www.bloomberg.com/news/articles/2022-05-19/china-in-talks-with-russia-to-buy-oil-for-strategic-reserves-l3cusjp0

Our beloved apple is back ! We love u

We love apple ! You are our beloved apple

We love you apple!

Oh my beloved apple ! We all love you