Is increased gasoline demand bullish for Valero? By StockNews

© Reuters. Is increased gasoline demand bullish for Valero?

The demand for gasoline is increasing. This demand will likely increase even more as people get vaccinated and hit the road this summer. What does this demand for gasoline mean for a business like Valero Energy Corporation (NYSE 🙂 and its stock price? Read on to find out.

  • Gasoline continues its upward trend
  • Vaccines leading to herd immunity could push gasoline even higher
  • The cracks are firm
  • Valero announced profits on April 22 – stock climbed – continues to outperform EPS forecast
  • VLO pays an attractive dividend

Refining into gasoline and distillates is a capital intensive activity. When the spread of crack in gasoline fell into negative territory in March 2020 and the distillate processing margin hit the lowest level in a decade, refineries struggled. Companies that turn oil into products buy crude oil at market prices and sell the products at market prices. They are only exposed at the refining margin.

Valero Energy Corporation (VLO) is a leading US refining company. Rising prices for petroleum and petroleum products have led to more attractive refining margins. Since hitting a low of $ 31 per share in March 2020 and a low of $ 35.44 at the end of October 2020, stocks have more than doubled to the recent high and have been trading above from the $ 70 level at the end of last week.

An attractive dividend and the outlook for increased demand for gasoline could push VLO shares to a very high level in the weeks and months to come as the US enters peak season. The gasoline market made a substantial comeback from the pandemic period in 2020, and this trend is expected to continue. The increased demand for gasoline in the post-pandemic period is optimistic for Valero stocks, which are back in the buy zone.

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