In a new report, Macquarie Research analyst Vikas Dwivedi explains the firm’s updated bullish outlook for U.S. independent refiners. Macquarie initiated coverage on U.S. refiners on Friday with five new Outperform ratings in the space.

Long-Term Outlook

Dwivedi sees the long-term outlook for refiners as positive for a number of reasons. While oil demand remains above 1 MM BPD, refining capacity continues to be tight. Oil finding and development (F&P) costs have fallen to $25/BBL, lowering crude production break-even levels. Finally, there has been an increase in capital discipline in the space, which opens the doors for special dividends and share buybacks.

Value Opportunities

Despite concerns over the outlook for U.S. crude oil production growth, Dwivedi believes…

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