Mixed Signals for Oil Stocks

Anadarko Petroleum Corp. (NYSE: APC) is up about 0.5% at $94.35 in a 52-week range of $65.82 to $96.75. Monday’s high was $94.89 set shortly before noon. Anadarko is already moving workers back to Gulf platforms, as is Marathon Oil Corp. (NYSE: MRO), which is up 0.7% at $35.03 after touching a high of $35.19 earlier. The stock’s 52-week range is $28.63 to $37.87.

Refining stocks are losing ground today as HollyFrontier Corp. (NYSE: HFC) was hit with a downgrade from Imperial Capital which dropped its rating on the stock from Outperform to In-line and lowered its price target from $49 a share to $41 a share. Last Friday Oppenheimer lowered ratings on five refiners, including HollyFrontier, Tesoro Corp. (NYSE: TSO), and Valero Corp. (NYSE: VLO) from Outperform to Perform.

The Oppenheimer downgrade came as the firm cut its earnings estimates for the refiners noting weaker crack spreads on gasoline and lower margin capture rates. The issue for HollyFrontier is that its mid-continent refineries will lose the benefit of cheaper crude supplies from North Dakota as more rail transportation to East Coast refineries cuts the spread between Brent crude and Bakken crude.

Tesoro, with more than 250,000 barrels a day of refining capacity in California, benefits from the tight California market and will double its refining capacity in the state when its acquisition of BP’s Carson refinery is completed. Valero’s vast Gulf Coast capacity is expected to benefit as the southern leg of the Keystone XL pipelines begins moving crude from Cushing, Oklahoma, to the Gulf Coast, but as the spread narrows between Bakken crude and Brent Valero’s margins could get squeezed.

HollyFrontier’s shares are down 0.7% today at $41.47 in a 52-week range of $36.22 to $59.20. Tesoro’s shared down 0.9% at $43.82 in a 52-week range of $35.28 to $65.75.