NEW YORK (AP) -- A JPMorgan analyst on Monday downgraded a trio of oil refiners, saying that seasonal factors and narrowing differentials between certain benchmark oil prices will keep their shares from rising much.
Katherine Lucas Minyard lowered her ratings for HollyFrontier Corp., Marathon Petroleum Corp. and Valero Energy Corp. to "Underweight" from "Neutral."
She said that while the companies' long-term finances still look good, traditionally weaker results in the second half of the year and a reduced differential between Brent crude, the benchmark for international oil varieties, and West Texas Intermediate, the benchmark crude in the U.S., will pressure their shares.
She also pointed to recent cuts in some of the companies' profit predictions and a slowdown in cash returns to shareholders.
Minyard recommended that investors with a positive long-term outlook in refining companies shift their holdings to Phillips 66, while those looking to benefit from U.S. coastal, versus inland, spreads should look at Tesoro Corp. She backed her "Overweight" ratings for both companies.
In morning trading, HollyFrontier shares fell 48 cents to $42.30. Marathon Petroleum rose $1.09 to $72.15 and Valero rose 39 cents to $35.16. Phillips 66 rose 96 cents to $59.87 and Tesoro rose 31 cents to $52.62.