Valero Energy Upbeat on St. Charles Refinery, Shuts Operations at Wilmington Location9/3/2008 11:35 AM
It’s a good news/bad news kind of day for Valero Energy. The oil refiner noted that there was no significant structural damage to its St. Charles, Louisiana refinery in the wake of Hurricane Gustav. The St. Charles refinery, which churns out 250,000 barrels per day, was shut down ahead of the storm’s U.S. landfall; plans to restart the location are still in the works. Other refineries in the storm’s path — including those in Houston, Texas City, and Port Arthur, Texas — continue to operate at reduced output rates in the storm’s aftermath. On the other hand, Valero shut down a 54,000-barrel-per-day fluid catalytic cracker (FCC) at its Wilmington, California refinery due to “a mechanical problem with the unit,” said spokesman Bill Day. He added, “The repairs are underway, but we still have no estimate on when it will be back up.”
In today’s trading, VLO is up more than 4% after swallowing a loss of nearly 5% on Tuesday. The stock finished last week narrowly atop its 10-week moving average for the first time since late May, and seems poised to do so again this week.
However, the predominance of call options on Valero indicates that many bulls may have already jumped on the bandwagon. The stock’s Schaeffer’s put/call open interest ratio is resting at an annual low of 0.25, as calls outnumber puts by 4-to-1 among near-term options. Plus, traders on the International Securities Exchange have snapped up 6.2 calls on VLO for every 1 put during the past 10 trading days. This ratio is resting near an annual high, which indicates that the stock’s buy-to-open option activity on the ISE has rarely been more bullishly skewed.