Shares of refiners fell Friday after an analyst downgrade the sector, citing dropping demand and the beleaguered economy, though the declines were partially offset by a drop in crude prices.
Bernstein Research analyst Neil McMahon cut his rating on refiners to "Market-weight" from "Overweight" and downgraded Tesoro Corp. and Sunoco Inc. to "Market-perform" from "Outperform."
Meanwhile, light, sweet crude for August delivery fell 41 cents to settle at $128.88 a barrel on the New York Mercantile Exchange. That's a stark difference from last week when prices flirted with the $150 per barrel mark.
"Demand growth continues to deteriorate as higher prices and a slowing economy continue to bite," McMahon said in a note to clients. "Our fear is that, in the case of a full blown global recession, refining margins and earnings could decline further still."
Shares of Tesoro fell $1.16, or 6.5 percent, to $16.69, and shares of Sunoco ended up 2 cents at $36.70, after trading as low as $34.91 during the session.
Shares of Valero shed 45 cents to $33.11. McMahon kept an "Outperform" rating on the company, saying it is "undervalued even in the current environment."
Meanwhile, shares of Frontier Oil Corp. lost $1.21, or 6.2 percent, to $18.27, and shares of Holly Corp. decreased $1.59, or 5.3 percent, to $28.59.
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