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3 Oil Refiners to Gain as EPA Considers a Blending Requirement Cut

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The overall business environment for energy companies is improving at a healthy pace from the coronavirus onslaught. It’s thus time to keep a close eye on oil refiners since the biofuel blending requirements could possibly get lowered to a great extent.

EPA Considers to Lower US Biofuel Blending Requirement

The Biden administration is proposing to drastically lower the requirement for the nation's biofuel blending, per Reuters. This comes across as a favor for the oil industry after the coronavirus pandemic dented worldwide demand for gasoline.

The biofuel policy of the country is being administered by President Biden's Environmental Protection Agency (EPA). The blending mandates for 2020 and 2021 will likely be lowered to about 17.1 billion gallons and 18.6 billion gallons, respectively, per the document cited by Reuters. Thus, as compared to the 20.1 billion gallons level, that was confirmed for last year before the pandemic wreaked havoc on the energy market, the proposed levels are considerably lower.

The report cited that oil refining companies will possibly blend 20.8 billion gallons of renewable fuel into the nation's fuel mix for the 2022 compliance year. It has been cautioned by administrative officials that they have not finalized the numbers, which are awaiting further revisions. No comment on this event has still been made by the EPA.

Stocks to Gain

If the proposals are adopted, it would be a big win for oil refiners. This is because with lower renewable fuel been blended, biofuel blending costs will likely reduce. We are presenting three refining stocks that should be on investors’ radar as these could probably gain following the adoption of the proposal. Each of the stocks carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Valero Energy Corporation VLO, having operating interests in 15 petroleum refineries in the United States, Canada and the United Kingdom, gained 3.2% yesterday on the news. The company is also likely to generate strong cashflows on the back of rising gasoline demand since coronavirus vaccines are being rolled out at a massive scale. Over the past seven days, the stock has seen upward earnings estimate revisions for 2021.

PBF Energy Inc. PBF gained 10.8% yesterday on the news. In the United States, the company is among the largest independent petroleum refiners. Improving fuel demand is also aiding the stock. In 2021, the company is likely to see bottom-line growth of 54.9%.

Phillips 66 PSX is among the largest refiners in the world and gained 4.2% on the news. It is also being aided by improving fuel demand. In the past seven days, the stock has seen upward earnings estimate revisions for 2021. 


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Valero Energy Corporation (VLO) : Free Stock Analysis Report
 
Phillips 66 (PSX) : Free Stock Analysis Report
 
PBF Energy Inc. (PBF) : Free Stock Analysis Report
 
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