In this article, we discuss 10 best oil refinery stocks to buy.

Oil refining refers to the treatment of crude oil after extraction to obtain high-quality oil components that are free of any impurities. Global refined oil product markets are likely to remain constrained until mid-decade, and the global downstream sector is facing meaningful near, intermediate, and long-term challenges, as per a new report published by S&P Global and the International Energy Forum. According to an Oil Refining Industry Insights report, in 2020, the global oil refining capacity declined for the first time in 20 years and this trend continued in 2021, given the aftermath of the COVID-19 pandemic, high refinery closures, and transformations to biofuels or distribution terminals. 

The global oil refining market was worth $1,345 billion in 2020, and it is expected to be valued at $3,751.5 billion by 2030, indicating a compound annual growth rate of 5.3% during the forecast period of 2021 to 2030. The global demand for oil refining is driven by the increase in world population and consequent urbanization, expansion and upgradation of refineries to meet higher demand for oil and oil derivative products, increased aviation and transportation, and the development of emerging economies. 

Some of the major African countries, such as Nigeria and Algeria, are attempting to become some of the largest regional hubs for refineries in the near future. Asia-Pacific is forecasted to remain a primary player in the oil refining market, and the region accounted for about 26.3% of the total global refining output as of 2021. It is expected to remain a major region given the planned refinery projects in China and India. Some of the best oil refinery stocks to buy include Marathon Petroleum Corporation (NYSE:MPC), Shell plc (NYSE:SHEL), and Phillips 66 (NYSE:PSX). 

Our Methodology 

We selected the following oil refinery stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm. 

Best Oil Refinery Stocks To Buy

10. Clean Energy Fuels Corp. (NASDAQ:CLNE)

Number of Hedge Fund Holders: 16

Clean Energy Fuels Corp. (NASDAQ:CLNE) was incorporated in 2001 and is headquartered in Newport Beach, California. Clean Energy Fuels Corp. (NASDAQ:CLNE) offers natural gas as an alternative fuel for vehicles and related fueling solutions in the United States and Canada. It supplies renewable natural gas, compressed natural gas, and liquefied natural gas for medium and heavy-duty vehicles. 

On November 8, Clean Energy Fuels Corp. (NASDAQ:CLNE) reported a Q3 non-GAAP EPS of $0.06, beating market estimates by $0.02. The revenue came in at $125.7 million, up 46% on a year-over-year basis, outperforming Wall Street forecasts by $0.94 million. The company sold 54.1 million gallons of renewable natural gas in the third quarter of 2022, indicating a 28.2% increase compared to the third quarter of 2021. 

UBS analyst Manav Gupta initiated coverage of Clean Energy Fuels Corp. (NASDAQ:CLNE) on December 13 with a Buy rating and a $12 price target, demonstrating 110% upside from current levels. The analyst sees dairy renewable natural gas as a “strong and viable solution” that reduces both emissions and fuel expenses. Clean Energy Fuels Corp. (NASDAQ:CLNE) is best positioned to benefit from larger adoption of dairy RNG in the transportation sector, the analyst wrote in a research note.

According to Insider Monkey’s data, 16 hedge funds were bullish on Clean Energy Fuels Corp. (NASDAQ:CLNE) at the end of the third quarter of 2022 with collective stakes worth $52 million, compared to 15 funds in the prior quarter worth $34 million. D E Shaw is the leading stakeholder of the company, with 3.8 million shares valued at $20.8 million. 

Like Marathon Petroleum Corporation (NYSE:MPC), Shell plc (NYSE:SHEL), and Phillips 66 (NYSE:PSX), Clean Energy Fuels Corp. (NASDAQ:CLNE) is one of the premier oil refinery stocks to monitor. 

9. Par Pacific Holdings, Inc. (NYSE:PARR)

Number of Hedge Fund Holders: 23

Par Pacific Holdings, Inc. (NYSE:PARR) is a Texas-based company that owns and operates energy and infrastructure businesses. The company operates through three segments – Refining, Retail, and Logistics. The Refining segment manages three refineries that produce ultra-low sulfur diesel, gasoline, jet fuel, marine fuel, distillate, asphalt, low sulfur fuel oil, and other associated refined products for customers in Hawaii, Pacific Northwest, Wyoming, and South Dakota. It is one of the best oil refinery stocks to invest in. 

On November 1, Par Pacific Holdings, Inc. (NYSE:PARR) reported Q3 non-GAAP earnings per share of $2.88 and a revenue of $2.06 billion, outperforming Wall Street forecasts by $0.87 and $370 million, respectively. Revenue for the period climbed 57.3% on a year-over-year basis. 

Piper Sandler analyst Ryan Todd on November 9 raised the price target on Par Pacific Holdings, Inc. (NYSE:PARR) to $29 from $22 and maintained a Neutral rating on the shares. Despite investor concerns of a “one off” uplift to refining margins in 2022, latest earnings results from independent refiners and “persistent systemic tightness have made it abundantly clear that global tightness in refined product markets is likely to persist for quite some time,” the analyst told investors in a research note. He raised his 2023 outlook for refining margins to within 10% of 2022 margins.

According to the third quarter database of Insider Monkey, 23 hedge funds held stakes worth $240.7 million in Par Pacific Holdings, Inc. (NYSE:PARR), compared to the same number of funds in the prior quarter worth $228 million. David Rosen’s Rubric Capital Management is the leading position holder in the company, with 3.70 million shares valued at $60.7 million. 

8. Delek US Holdings, Inc. (NYSE:DK)

Number of Hedge Fund Holders: 27

Delek US Holdings, Inc. (NYSE:DK) was founded in 2001 and is headquartered in Brentwood, Tennessee. The company specializes in the integrated downstream energy business in the United States, operating through three segments – Refining, Logistics, and Retail. The Refining division processes crude oil and other feedstock for the manufacture of different grades of gasoline, diesel fuel, aviation fuel, asphalt, and other petroleum-based products. It owns and operates four independent refineries located in Texas, Arkansas, and Louisiana, as well as three biodiesel facilities. 

On November 1, Delek US Holdings, Inc. (NYSE:DK) declared a $0.21 per share quarterly dividend, a 5% increase from its prior dividend of $0.20. The dividend was distributed to shareholders on December 2. The Q3 2022 revenue climbed 79.7% year-over-year to $5.32 billion, beating market estimates by $1.63 billion. For Q4 2022, Delek US Holdings, Inc. (NYSE:DK) expects share buybacks of $75 million to $100 million, debt reduction of $100 million to $150 million, and a $0.01 per share dividend hike. The company is also seeking opportunities to shrink its cost structure and improve the efficiency of its portfolio, making it one of the premier oil refinery stocks to consider. 

Investment advisory Piper Sandler on November 9 raised the firm’s price target on Delek US Holdings, Inc. (NYSE:DK) to $50 from $44 and reiterated an Overweight rating on the shares. Analyst Ryan Todd issued the ratings update. 

According to Insider Monkey’s third quarter database, 27 hedge funds held stakes worth $270.3 million in Delek US Holdings, Inc. (NYSE:DK), compared to 28 funds in the prior quarter worth $247.7 million. 

7. PBF Energy Inc. (NYSE:PBF)

Number of Hedge Fund Holders: 32

PBF Energy Inc. (NYSE:PBF) is a New Jersey-based company that engages in refining and supplying petroleum products. It produces gasoline, ultra-low sulfur diesel, heating oil, diesel fuel, jet fuel, lubricants, petrochemicals, asphalt, unbranded transportation fuels, petrochemical feedstocks, blending components, and other petroleum products. The company sells its products in the Northeast, Midwest, Gulf Coast, and West Coast of the United States, as well as in other regions of the United States, Canada, and Mexico. It is one of the best oil refinery stocks to monitor. 

On December 12, PBF Energy Inc. (NYSE:PBF) announced that its board authorized the repurchase of up to $500 million of its class A stock, which led its shares 7.3% higher. On November 30, PBF Energy Inc. (NYSE:PBF) disclosed the conclusion of its acquisition of all common units in PBF Logistics it did not already own, after more than two-thirds of issued and outstanding PBF Logistics common unitholders voted to authorize the merger proposal.

Piper Sandler analyst Ryan Todd raised the price target on PBF Energy Inc. (NYSE:PBF) to $69 from $53 and reiterated an Overweight rating on the shares on November 9. 

According to Insider Monkey’s September quarter data, PBF Energy Inc. (NYSE:PBF) was part of 32 hedge fund portfolios, compared to 31 in the last quarter. The combined stakes in Q3 2022 increased to $508.75 million from $494.2 million in Q2. Israel Englander’s Millennium Management held the biggest stake in the company, with 2.3 million shares worth $82.3 million. 

6. HF Sinclair Corporation (NYSE:DINO) 

Number of Hedge Fund Holders: 33

HF Sinclair Corporation (NYSE:DINO) was incorporated in 2021 and is headquartered in Dallas, Texas. It is an independent energy company that produces and markets gasoline, diesel fuel, jet fuel, renewable diesel, specialty lubricant products, specialty chemicals, and specialty and modified asphalt. The company also owns and operates refineries located in Kansas, Oklahoma, New Mexico, Utah, Washington, and Wyoming. HF Sinclair Corporation (NYSE:DINO) markets its refined products in the Southwest United States and Rocky Mountains, Pacific Northwest, and in other neighboring Plains states. 

On November 7, HF Sinclair Corporation (NYSE:DINO) reported a Q3 non-GAAP EPS of $4.58, beating Wall Street estimates by $0.36. The revenue of $10.6 billion climbed 126% year-over-year, exceeding market consensus by $1.88 billion. The company cited robust product margins and record throughputs in its refining segment for the solid third quarter results. HF Sinclair Corporation (NYSE:DINO) also distributed a $0.40 per share quarterly dividend on December 5. 

Cowen analyst Jason Gabelman on November 8 raised the price target on HF Sinclair Corporation (NYSE:DINO) to $68 from $60 and kept an Outperform rating on the shares. The analyst noted that the company wants to continue to repurchase stock at an elevated pace until the payout ratio kicks in Q2, though he believes the buyback will significantly be dictated by third party selling.

According to Insider Monkey’s third quarter data, 33 hedge funds were bullish on HF Sinclair Corporation (NYSE:DINO), with collective stakes worth $477 million, compared to the same number of funds in the prior quarter worth $450 million. Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with 1.16 million shares amounting to $62.5 million. 

In addition to Marathon Petroleum Corporation (NYSE:MPC), Shell plc (NYSE:SHEL), and Phillips 66 (NYSE:PSX), HF Sinclair Corporation (NYSE:DINO) is one of the top oil refinery stocks to invest in. 

5. Phillips 66 (NYSE:PSX)

Number of Hedge Fund Holders: 34

Phillips 66 (NYSE:PSX) is a Texas-based energy manufacturing and logistics company that operates through four segments – Midstream, Chemicals, Refining, and Marketing and Specialties. The Refining segment refines crude oil and other feedstocks into petroleum products, such as gasoline, distillates, aviation, and renewable fuels at refineries in the United States and Europe. Phillips 66 (NYSE:PSX) is one of the premier oil refinery stocks to invest in. 

On December 9, Phillips 66 (NYSE:PSX) revealed a $2 billion capital budget for FY 2023, including 50% of planned $1.1 billion in growth capital supporting low-carbon efforts, compared to 45% allocated in the company’s 2022 plan. The company aims to spend $1.1 billion in growth capital in its refining business in 2023, including $729 million on the conversion of the San Francisco Refinery in Rodeo, California, into one of the world’s biggest renewable fuels facilities.

Piper Sandler analyst Ryan Todd on November 9 raised the firm’s price target on Phillips 66 (NYSE:PSX) to $155 from $116 and kept an Overweight rating on the shares

According to Insider Monkey’s Q3 data, Phillips 66 (NYSE:PSX) was part of 34 hedge fund portfolios, compared to 38 in the prior quarter. D E Shaw held the leading stake in the company, consisting of 3.10 million shares worth $250.3 million. 

4. Shell plc (NYSE:SHEL)

Number of Hedge Fund Holders: 39

Shell plc (NYSE:SHEL) is a London-based energy and petrochemical company with operations in Europe, Asia, Oceania, Africa, the United States, and rest of the Americas. The company refines crude oil and other feed stocks, such as low-carbon fuels, lubricants, bitumen, sulfur, gasoline, diesel, heating oil, aviation fuel, and marine fuel. It is one of the leading oil refinery stocks to monitor. On November 28, Shell plc (NYSE:SHEL) said it agreed to acquire Danish biogas producer Nature Energy Biogas from Davidson Kempner Capital Management for nearly $2 billion. It is Europe’s largest producer of renewable natural gas, which will improve Shell plc (NYSE:SHEL)’s capacity to work with its established customer base across multiple sectors to accelerate its transition to net-zero emissions.

On December 6, Deutsche Bank analyst James Hubbard raised the firm’s price target on Shell plc (NYSE:SHEL) to 2,987 GBp from 2,761 GBp and kept a Buy rating on the shares.

According to Insider Monkey’s data, 39 hedge funds were long Shell plc (NYSE:SHEL) at the end of September 2022, and Ken Fisher’s Fisher Asset Management held the largest stake in the company, with 20.8 million shares worth over $1 billion. 

Here is what Harding Loevner International Equity Fund has to say about Shell plc (NYSE:SHEL) in its Q1 2022 investor letter:

“While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia (just as Europe, at least for now, plans to keep its gas pipelines open), and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case—admittedly an educated guess—is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit, relatively, from a further receding of globalization. (Global trade, after all, has never matched the peak share of GDP it reached in 2008, before the Global Financial Crisis.) We’d expect such a world to be less efficient, as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where. That would lead to a less prosperous world, since exploiting comparative advantage is a cornerstone of wealth creation. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our multinational companies were at risk of declining sales from increasingly hostile, siloed countries. Royal Dutch Shell (NYSE:SHEL) has found its Siberian oil and gas joint venture assets stranded by the combination of sanctions and the public opprobrium of Russia’s actions.”

3, Valvoline Inc. (NYSE:VVV)

Number of Hedge Fund Holders: 40

Valvoline Inc. (NYSE:VVV), priorly known as the Continuous Oil Refining Company, sells automotive oil, additives, and lubricants under the Valvoline brand. It is one of the best oil refining stocks to monitor. Valvoline Inc. (NYSE:VVV) paid a $0.125 per share quarterly dividend to shareholders on December 15. 

RBC Capital analyst Steven Shemesh on December 6 initiated coverage of Valvoline Inc. (NYSE:VVV) with an Outperform rating and a $39 price target. Following the sale of its global products division, Valvoline Inc. (NYSE:VVV) will be a “faster growing, higher margin business, with strong free cash flow generation”, the analyst told investors in a research note. The analyst believes a 14-times target multiple appropriately balances its “industry leading growth against separation risk/terminal growth concerns.”

According to Insider Monkey’s data, 40 hedge funds were long Valvoline Inc. (NYSE:VVV) at the end of Q3 2022, compared to 39 funds in the prior quarter. Andreas Halvorsen’s Viking Global is the leading position holder in the company, with 5.8 million shares worth $148 million. 

Wasatch Core Growth Fund released its Q2 2021 investor letter and mentioned Valvoline Inc. (NYSE:VVV): 

“Another significant contributor was Valvoline, Inc. (VVV), a company that manufactures lubricants and car parts and operates oil-change service centers. In addition to benefiting from the economic reopening, the company has discovered the advantages of making a mobile app available. Valvoline customers can use the app to find the closest service center and view live estimated wait times. Certainly, the adoption of technology to improve productivity and convenience isn’t a new theme. But we see mobile digitalization as a highly disruptive innovation that creates additional relationships among companies, distributors and customers. As a result, mobile digitalization is a competitive consideration in more and more of the companies that we evaluate for investment. In the first quarter, Valvoline’s stock declined partially because investors worried about the increasing popularity of electric vehicles (EVs)— which are much less dependent on petroleum products. But the stock rebounded in the second quarter, we think partly based on the realization that EVs still represent a tiny percentage of new cars sold and an even smaller percentage of cars in service. Moreover, Valvoline reported strong earnings and raised projections for the future.”

2. Valero Energy Corporation (NYSE:VLO)

Number of Hedge Fund Holders: 47

Valero Energy Corporation (NYSE:VLO) is a Texas-based company that manufactures, markets, and sells transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, and internationally. The company operates through three segments – Refining, Renewable Diesel, and Ethanol. Valero Energy Corporation (NYSE:VLO) declared a $0.98 per share quarterly dividend on December 8. It is one of the premier oil refinery stocks to invest in. 

Piper Sandler analyst Ryan Todd on November 9 lifted the firm’s price target on Valero Energy Corporation (NYSE:VLO) to $177 from $147 and reiterated an Overweight rating on the shares.

Among the hedge funds tracked by Insider Monkey, 47 funds reported owning stakes worth $1.3 billion in Valero Energy Corporation (NYSE:VLO) at the end of Q3 2022, compared to 43 funds in the prior quarter worth $760 million. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held the biggest position in the company, with 3.13 million shares worth $334.5 million. 

1. Marathon Petroleum Corporation (NYSE:MPC)

Number of Hedge Fund Holders: 50

Marathon Petroleum Corporation (NYSE:MPC) was founded in 1887 and is headquartered in Findlay, Ohio. It operates as an integrated downstream energy company in the United States, operating in two segments – Refining & Marketing, and Midstream.  The Refining & Marketing segment refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent, and West Coast regions of the United States. It is one of the top oil refinery stocks to buy now. 

On November 1, Marathon Petroleum Corporation (NYSE:MPC) declared a $0.75 per share quarterly dividend, a 29.3% increase from its prior dividend of $0.58. The dividend was paid to shareholders on December 12. 

Wells Fargo analyst Roger Read raised the price target on Marathon Petroleum Corporation (NYSE:MPC) on November 3 to $131 from $116 and kept an Overweight rating on the shares. While Q4 results may be softer due to higher turnaround activity planned, the analyst noted that upside potential remains significant.

According to Insider Monkey’s data, 50 hedge funds were bullish on Marathon Petroleum Corporation (NYSE:MPC) at the end of Q3 2022, and Paul Singer’s Elliott Management is the leading position holder in the company, with 11 million shares worth over $1 billion. 

Here is what Clark Street Value has to say about Marathon Petroleum Corporation (NYSE:MPC) in its Q4 2021 investor letter:

“During the worst of covid, I bought some LEAPs on Marathon Petroleum (MPC) as a proxy for Par Pacific (PARR) since long dated options weren’t available on the later.  Those MPC calls expire next month and I’ll take profits, with PARR I’ve reduced my position throughout the year and might sell the rest early next year, I’ve owned it for 6-7 years and it has gone nowhere, they haven’t touched the NOLs, just a difficult business that I probably don’t understand as well as I should.”

You can also take a look at 10 Stocks Most Affected By Inflation and 10 Biggest Dividend Cuts of 2022. 

Suggested articles:

• Best Dogs of the Dow Stocks
• 10 Undervalued Insurance Stocks To Buy
• 15 Stocks That Members of Congress Own

Disclosure: None. 10 Best Oil Refinery Stocks To Buy is originally published on Insider Monkey.