Western Refining Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Western Refining (NYSE: WNR  ) are down 12% today as refiners get socked by the market.

So what: Refiners are being hit hard today as oil surges higher. But what's worse in the long term for some refiners is that they won't be able to take advantage of a large spread between West Texas Intermediate, or WTI, oil prices versus Brent crude because of a pipeline reversal. When Enbridge (NYSE: ENB  ) said it was buying 50% of the Seaway pipeline from ConocoPhillips (NYSE: COP  ) , it also said it would reverse the pipeline's flow to ease supply in Cushing, Okla.

Now what: Refiners have used the spread in oil prices to enhance profits, so investors are speculating that the spread will come down and profits will fall. With oil on the rise anyway, I don't think that refiners are where I want to be right now. I don't see anything that makes me want to buy here and would avoid the sector in the face of rising costs.

Interested in more info on Western Refining? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Western Refining. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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