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Valero Energy Hits A Wall — Will It Bounce Back?


Valero hasn't done well in the stock market over the past few weeks.

The company's rally is impeded by concerns over its Q1 performance and low crack spreads.

What's next for VLO?

The recovery of Valero Energy (NYSE:VLO) seems to have come to halt in the last couple of weeks. Even though crack spreads are slowly rising again and refinery activity in the U.S. is up in the first quarter, Valero investors are still concerned over a possible disappointing earnings report. Will the stock reheat anytime soon?

Spreads continue to recover

From February crack spreads started to pick up before their recovery came to a halt back in mid-March, as you can see in the following chart. Over the past couple of weeks, however, spreads have started to rise again, albeit they remain very low compared to last year.

And considering the spread between Brent and WTI - another important factor in impacting VLO's profit margin - has reached a quarterly average of only $1.72 back in Q1 2016, which is roughly a quarter of the spread recorded back in Q1 2015, no wonder the current...