Four U.S. oil refiners closed out a sixth consecutive week of gains on Friday, with share prices rising between 33% and over 40% since early August. Marathon Petroleum Corp. (NYSE: MPC) led the group this week, gaining 7.1% to $424.07, and 42% over the six-week stretch. HF Sinclair Corp. (NYSE: DINO) rose 7.5% to $115.95, Valero Energy Corp. (NYSE: VLO) added 5.8% to $413.09, and Phillips 66 (NYSE: PSX) rose 5.4% to $273.42. The VanEck Oil Refiners ETF (NYSE: CRAK) has gained 19% over the same period.
The rally is driven by record margins on diesel. The U.S. ultra-low sulfur diesel crack spread, the margin earned turning a barrel of crude into diesel, remains above $100 a barrel, surpassing levels seen during the 2022 energy crisis. A drone strike on pumping stations along Saudi Arabia’s East-West pipeline this week pushed the national average diesel price above $6.30 a gallon, past the previous record of $5.901 set on Sept. 8.
Second-quarter results showed the strength in refining margins. Marathon’s refining and marketing margin jumped to $36.33 a barrel from $17.58 a year earlier. Valero’s realized refining margin roughly doubled year over year. Both companies returned more than $5 billion to shareholders through buybacks and dividends in the quarter.
Goldman Sachs forecasts U.S. diesel refining profits holding near $63 a barrel into 2027, well below today’s record, but still roughly triple a normal mid-cycle margin.
