Will Oil Refineries Suffer From the Drop in the Brent-WTI Spread?

NEW YORK (TheStreet) -- Leading U.S refineries haven't done well in the stock market in the past few months. For one, the drop in the spread between Brent oil and West Texas Intermediate could drag down these companies' profit margins in the near term. But is there a cause to worry? Let's take a closer look at two U.S oil refineries Valero Energy (VLO) and Marathon Petroleum (MPC) and see the impact the lower difference between the price of Brent and WTI had on their profit margins in the past quarter.

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During the past quarter, the difference between the price of WTI oil and Brent oil contracted to range between $3 per barrel and $8 per barrel. The average was $6.73 during the past quarter. Back in the second quarter of 2013 the spread was around $5 and $14 per barrel and the average at $9.23. This spread even topped, at one point in 2013, the $20 mark due to the looser U.S oil market relative to the European market. But in the past several months the two oil markets have started to close the gap, which brought down the Brent-WTI spread.

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Tuesday, Valero Energy came down by 1.36% to $49.73 per share and plummeted by 14.7% since the beginning of May. Marathon Petroleum rallied 0.66% to $85.03. Despite this recent gain, the company's stock is down 11.4% in the past three months.

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