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Gold/Mining/Energy : Big Dog's Boom Boom Room

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From: ChanceIs	6/21/2007 4:16:18 PM
	of 206094

Don't Get Too Pumped for Summer Drives Friedman Billings Ramsey WEDNESDAY'S DEPARTMENT OF ENERGY petroleum status report for the week ending June 15 was negative for the refiners, with the administration reporting a larger-than-expected increase in gasoline inventories. However, it is important to note that U.S. gasoline inventories typically rise at this time of year in preparation for July-August peak demand, but with stocks still 10.6 million barrels (5%) below comparable year-ago levels, we believe that inventories will remain low throughout the summer, supporting the current high-refining-margin environment with any unexpected supply disruptions producing price spikes. We reiterate our Overweight rating on the sector, with Outperform-rated Valero Energy our top recommendation. Gasoline inventories rose by 1.8 million barrels, above the consensus expectation for a 1.2 million-barrel build. Distillate inventories rose by 0.2 million barrels, below the consensus expectation for a 0.9 million-barrel build. Crude-oil inventories climbed by 7.0 million barrels, well above the consensus expectation for a 0.1 million-barrel draw. FBR's average U.S. refining margin increased by 3% over the past week from $22.35 per barrel as of June 12 to $23.10 per barrel as of June 19; the midcycle (assuming $50-per-barrel WTI crude oil) equals $11.40 per barrel. The FBR Refiner Stock Price Index rose by 6% over the past week.

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