Refiner stocks have enjoyed a nearly unprecedented rally in 2026, but history suggests the good times may not last. According to CNBC, the S&P 500 Oil & Gas Refining & Marketing Sub Industry group—comprising Marathon Petroleum, Valero Energy, and Phillips 66—has jumped 104% this year.
The surge has been driven by a dramatic widening of crack spreads, the difference between crude oil prices and the refined products they yield. The WTI 3-2-1 crack spread is near $59 per barrel, nearly tripling since January, and well above the 2010–2021 average of about $19. Nymex 3:2:1 spreads for September are around $69.92, up from less than $20 in early January, while August 2027 contracts trade at $44.38—more than 35% lower.
Shares of Marathon Petroleum and Valero have nearly doubled year to date, Phillips 66 is up 66%, and HF Sinclair has gained over 80%—all against an 11% rise in the S&P 500.
Overbought signals flash
According to Carter Worth at WorthCharting, the group’s index is now 41% above its 150-day moving average—a level that has occurred only five times in its history. In each of those instances, the six-month forward return was negative, averaging a 10.1% decline.
Worth cautions that the margin driver here is geopolitical, and geopolitical premiums are reversible. The blowout in crack spreads stems from hostilities in the Strait of Hormuz and the Russia-Ukraine conflict. Russia, a major producer of refined products at perhaps 5.5 million barrels per day under normal circumstances, has seen production fall by 25–30% by some estimates.
If a ceasefire in the Gulf holds, crack spreads could fall sharply, dragging refiner stocks down with them. The average crack spread between February 2016 and February 2026—just before strikes on Iran—was $21.68, a far cry from current levels.
Cyclical trap
Refining is a cyclical business, and such businesses often look cheapest at the top as trailing P/E ratios compress on record earnings. Over the past decade, trailing P/Es for refiners like Phillips 66 and Marathon Petroleum have swung between the mid-single digits and 35–40 (excluding the pandemic period).
The adage that the best cure for high prices is high prices may apply, but it acts slowly. Demand destruction takes time, and supply normalization doesn’t happen overnight. If product markets stay short, mid-cycle cracks could reset higher, meaning today’s multiples may not be as stretched as they appear, and if Hormuz remains tense into year-end, the rally could extend further.
Still, the risks are mounting. Refining is a great business, but for those who have ridden this trade, it may be time to take profits. For those looking for mean reversion by year-end, a bearish bet using options could position for crack normalization on any de-escalation headline. This thesis applies broadly across major refiners, not just Marathon Petroleum.
Source: www.cnbc.com — https://www.cnbc.com/2026/08/17/refiner-stocks-are-on-a-nearly-unprecedented-run-history-says-it-could-end-soon.html
This article is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Do your own research and consult a licensed professional before making financial decisions.
