Energy: Refining Capacity, Are You There?

Refining capacity continues to remain below pre-pandemic levels, placing upward pressure on refined product pricing. We think crack spreads could remain elevated as inventory levels remain below their 5-year average while utilization remains elevated on low-capacity growth. We think these are secular tailwinds that benefit all parties in the long term, and should drive up demand for refining services of HF Sinclair (DINO), Marathon Petroleum (MPC), Phillips 66 (PSX), and Valero Energy (VLO).