DENVER (AP) â¿¿ Shares of several independent oil refiners were mixed Monday after an analyst raised her rating on the sector but noted that the industry faces challenges for at least another year.

Caris & Co. analyst Ann Kohler raised her rating to "3(asterisk)/Average" from "4(asterisk)/Average" on Alon USA Energy Inc., Frontier Oil Corp., Holly Corp., Sunoco Inc., Tesoro Corp. and Valero Energy Corp.

Kohler expects refiners' earnings to start improving in the second quarter, now that demand for refined product has stabilized and crude differentials have improved, she said in a research note. The above-average hurricane season forecast for the Atlantic Basin also should benefit the industry.

But there were caveats.

"Despite our upgrade, the industry will continue to face meaningful headwinds over the next 12 to 18 months, thanks to the combination of industry overcapacity..., increased ethanol blending, rising fuel efficiency standards and persistent higher unemployment," she said.

In early trading, Holly rose 4 cents to $25.94; Tesoro added 3 cents to $11.73; and Sunoco fell 9 cents to $27.98.

Shares of Alon fell 2 cents to $6.73; Frontier fell 1 cent to $13.90 and Valero Energy fell 34 cents to $18.35.
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