Oil Prices Remain High, But These 2 Refiners Keep Outperforming
The Middle East tensions are still driving high crude oil prices, with West Texas Intermediate (WTI) crude currently trading above $90 per barrel. The U.S. Energy Information Administration (“EIA”) in its latest short-term energy outlook projected WTI at $84.65 per barrel this year, higher than $65.40 last year.
Despite high crude oil prices, leading refiners such as Par Pacific Holdings, Inc. PARR and HF Sinclair Corporation DINO have witnessed gains of 21.9% and 67.4%, respectively, over the past six months, surpassing the oil-energy sector’s decline of 1%. In other words, the strong stock performance highlights investor optimism surrounding the refining space notwithstanding elevated crude prices. Let’s delve deeper.
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Global Refining Bottlenecks Persist
The global refining capacity is constrained, and fuel inventories are low. On the demand side, gasoline, diesel and jet fuel remain resilient. This means people are still driving and flying quite often, while diesel demand suggests transportation, freight, agriculture and industrial activity are holding up. As a result, with busy refineries and fuel not in abundant supply, refining margins for refiners are quite strong.
With crude prices likely to remain high, investors shouldn’t allocate their money only to exploration and production companies but should also keep an eye on refining players like PARR and DINO, even though high crude prices have been increasing refiners’ input costs.
2 Refiners to Gain: PARR, DINO
Par Pacific continued to benefit from a strong refining market at the start of the third quarter. Its refining index, which is a rough measure of how profitable it is to turn crude oil into products like gasoline and diesel, was still very high in July at $31.34 per barrel, only slightly below the second-quarter average of about $33.
Demand for fuels remained strong, especially on the mainland, while global fuel inventories stayed relatively tight. In simple terms, there was still healthy demand for refined products and limited excess supply, which helped PARR continue earning attractive margins from its refineries.
PARR appears well-positioned to benefit from still-strong refining margins, firm fuel demand and tight global product inventories.
HF Sinclair is not an exception. On its second-quarter 2026 call, the company mentioned that wars in the Middle East and Ukraine have disrupted refining capacities. DINO mentioned that inventories of fuel in the United States and in its key operating regions are low, especially when the demand for the end products remains healthy, thereby creating opportunities to continue to earn healthy refining margins.
Last Words
High oil prices don’t always mean the refining business is weak. In fact, the situation is the opposite now, making PARR and DINO must-watch stocks. While DINO sports a Zacks #1 Rank (Strong Buy), PARR carries a Zacks #3 Rank (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
