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Research Alert: CFRA Keeps Negative Fundamental View On Oil & Gas Refining Sub-industry

05/10/2021 05:52

09:45 AM EDT, 05/10/2021 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

Pipeline operator Colonial Pipeline enters Day 4 of a cyberattack-driven shutdown. Under normal conditions, Colonial handles 45% of the refined oil products that enter the U.S. East Coast (as far north as the metro NYC area), shipped there from the U.S. Gulf Coast. While cybersecurity efforts to restore Colonial are ongoing, in the interim, the industry will do what it can to find alternative conduits for refined product supply into the East Coast. We think President Biden should temporarily suspend the Jones Act, which would enable foreign-flagged vessels to carry product by sea from a port in the U.S. Gulf and unload cargo at other U.S. ports along the East Coast, such as New York Harbor (although more shipments from Europe are also likely). Beyond this crisis, we remain concerned that U.S. energy demand will remain below pre-pandemic levels for awhile, and that narrow Brent-WTI spreads keep refining margins low. Near-term, we see potential for fuel shortages should the crisis persist.