Flash | 08 Jan 2026 12:40:03 ET │ 12 pages Sinopec (0386.HK) Group Restructuring: Potential LT Synergy Benefits, But Limited Near- Term Impact CITI'S TAKE SASAC announced on 8 Jan that Sinopec Group (386.HK's parent) will undergo restructuring with China National Aviation Fuel (CNAF) Group. We expect this could strengthen Sinopec's refining & marketing business for jet fuel & SAF and mitigate structural PRC gasoline / diesel demand decline. Sinopec's 9M25 refinery jet/kero yield was 13.8% (vs. >20% for TOP/ ...

"So they have been running with suboptimal feedstock for years. This will, in time, produce better margins across jet fuel, asphalt, and diesel … I have owned Valero since 2020, and I am more resolved to holding it even longer after this weekend.†Valero Energy has emerged as a key focus for investors after renewed attention on Venezuela's oil sector following the capture of President Nicolas Maduro and US President Donald Trump's push to encourage American oil companies to help revive the country's batter ...

Core Viewpoint - The energy sector is gaining investor interest due to rising crude oil prices following the extradition of Venezuelan President Nicolas Maduro to the U.S., with Venezuela holding the largest oil reserves globally, estimated at 300 billion barrels, representing nearly 20% of the global oil supply [1] Group 1: Chevron's Position - Chevron is the only major U.S. oil company with authorized operations in Venezuela, maintaining its presence for nearly 100 years despite nationalization and geopolitical tensions [3] - The company has obtained special U.S. government licenses for limited operations and exports of Venezuelan oil, positioning it to potentially lead the rebuilding of Venezuela's oil industry [4] - Increased production and exports could aid in recovering billions owed to Chevron by PDVSA, enhancing supply to U.S. refineries optimized for heavy crude oil [5] Group 2: Financial Outlook - Chevron's annual earnings are projected to contract to $7.34 per share from $10.05 in fiscal 2024, with stock experiencing a 5% increase in trading [6] - The heavy crude from Venezuela could fill a critical supply gap, potentially leading to higher margins for Chevron [6] Group 3: Other Companies of Interest - Halliburton is expected to benefit from increased demand for oil-field services if the U.S. gains control of Venezuela's oil industry, particularly through its partnership with Chevron [7] - Valero Energy is reportedly in discussions with Chevron to resume shipments of Venezuelan crude, leveraging its complex refinery systems to convert heavy crude into high-value products [8] - Both Halliburton and Valero stock have a Zacks Rank 3 (Hold) and saw over 7% increases in stock price [9] Group 4: Additional Players - SLB Limited, formerly Schlumberger, is preparing to return to Venezuela's oilfields but currently holds a Zacks Rank 4 (Sell) due to stagnant EPS revisions [10] - ConocoPhillips, which previously operated in Venezuela, could see long-term prospects improve if it re-enters the market, currently holding a Zacks Rank 3 (Hold) [11]

Core Insights - The energy sector faced significant challenges in 2025, with oil prices under pressure due to oversupply concerns, leading to a stagnant performance compared to broader equity markets [1][3] - Despite the struggles, growth stocks in the energy sector, such as Cenovus Energy, TechnipFMC, and Valero Energy, are gaining attention as potential investment opportunities as the market transitions into 2026 [2][12] Energy Sector's Performance - The Oil/Energy sector delivered only 7% returns in 2025, while the S&P 500 surged by 20%, indicating a stark contrast in performance [3] - Crude oil prices fell to around $60 per barrel, over 20% lower than the beginning of the year, reflecting a supply-demand mismatch [3] Importance of Growth Stocks - Growth stocks in the energy sector focus on expanding volumes and improving efficiency rather than solely relying on commodity price cycles [5] - These companies are positioned for long-term gains through innovation and strategic investments in clean energy and advanced technologies [5][10] Potential for Upside Surprises - Growth stocks can outperform expectations, with even modest improvements in financial metrics leading to significant stock performance [6] - Investors looking beyond short-term volatility may find that growth stories develop quietly before gaining broader market recognition [6] Opportunities from Underperformance - Historical trends show that prolonged underperformance in energy stocks can lead to opportunities as weaker players exit the market, improving the competitive landscape for stronger companies [9] - Low prices can accelerate market rebalancing, leading to production cuts and tighter fundamentals, which may create attractive entry points for growth-focused investors [10] Growth Prospects for 2026 - The energy landscape heading into 2026 is nuanced, with expected subdued oil prices but growing demand for natural gas, LNG infrastructure, and efficiency-driven technologies [11] - Companies like Cenovus Energy, TechnipFMC, and Valero Energy are highlighted as having growth drivers tied to structural shifts in energy production and consumption [12] Company-Specific Insights - **Cenovus Energy**: Focuses on low-cost oil sands and refining assets, with a disciplined growth strategy and a Zacks Rank of 1, indicating strong potential for earnings growth [15][17] - **TechnipFMC**: A global provider of subsea and surface technologies, positioned for steady growth with a Zacks Rank of 2 and a focus on energy transition goals [18][20] - **Valero Energy**: One of the largest independent refiners, with a significant renewables footprint and a projected earnings growth of 25.1% for 2026, holding a Zacks Rank of 2 [21][23]

The Democrat crusade to divert blame for the stagflation crisis triggered during the Biden Administration led them down a path of economic lies.  The central theme of their narrative was that corporations were "price gouging" consumers and inflation was actually a product of "corporate greed."  In reality, helicopter money and dollar devaluation during the pandemic triggered a massive consumer demand rush as well as shortages in a variety of goods and raw materials.The profit margins in many of these indust ...

Core Insights - Inflationary pressures are moderating, leading to a return of price stability in markets, which is beneficial for many companies as they face lower input costs and improving profit margins heading into 2026 [1][2] Sector Analysis Consumer Staples - The consumer staples sector is poised for growth as key commodity input costs related to agricultural products, such as dairy, sugar, vegetable oils, and grains, decline [3] - Food processors and packaged-goods manufacturers are regaining margins that were previously compressed due to high input inflation [4] Capital Goods and Manufacturing - Capital goods and manufacturing companies are expected to benefit from easing inflation, particularly those that consume energy and commodities, such as chemical and heavy machinery producers [5] - Lower prices for petroleum-based inputs and industrial metals are reducing project costs and improving returns on new capital investments [5] Airlines and Logistics - Airlines and logistics companies are classic beneficiaries of easing price pressures, as fuel costs, a major operating expense, are declining [6] - Companies like Delta Air Lines and FedEx are well-positioned for margin expansion as economic activity normalizes, with fuel savings directly impacting their bottom lines [7] Company Highlights United Natural Foods (UNFI) - UNFI is regaining margins as inflation cools, with a projected revenue increase of 1% and a significant EPS increase of 187.3% for fiscal 2026 compared to the previous year [10] - The company has improved its gross margin by approximately 20 basis points year over year due to better procurement conditions [9] FedEx Corp. (FDX) - FedEx is undergoing a cost realignment initiative that resulted in $2.2 billion in annual cost savings, positioning it for margin recovery as inflation pressures fade [11] - The company is expected to see a revenue increase of 4.6% for fiscal 2026, with operating margin expansion driven by lower fuel expenses and structural cost reductions [12] LATAM Airlines Group (LTM) - LATAM Airlines is benefiting from a lean cost structure and improved air travel demand, with a projected revenue increase of 10.1% and EPS increase of 17.8% for 2026 [16] - The company achieved an adjusted operating margin of 18.1% in Q3 2025, supported by a decline in jet fuel expenses [15] Conclusion - The analysis indicates that companies in consumer staples, logistics, and transportation sectors are well-positioned to leverage declining input costs to restore margins and enhance financial performance as inflation eases [19]

Crude oil prices fell to levels not seen since the start of 2021 as a widely expected supply glut picked up momentum and peace talks in the Russia-Ukraine conflict took steps forward. Futures on international pricing benchmark Brent crude (BZ=F) fell by more than 2.8% to trade below $58.86 on Tuesday morning, while futures on US benchmark West Texas Intermediate (WTI) crude (CL=F) temporarily fell by a deeper 3.1% to trade below $55. Both energy products reached levels Tuesday morning that had not been s ...

Crude oil prices fell to levels not seen since the start of 2021 as a widely expected supply glut picked up momentum and peace talks in the Russia-Ukraine conflict took steps forward. Futures on international pricing benchmark Brent crude (BZ=F) fell by more than 2.8% to trade below $58.86 on Tuesday morning, while futures on US benchmark West Texas Intermediate (WTI) crude (CL=F) temporarily fell by a deeper 3.1% to trade below $55. Both energy products reached levels Tuesday morning that had not been s ...

Core Insights - Petrobras, the Brazilian state-run oil firm, will increase the average price of jet fuel sold to distributors by 3.8%, which translates to an increase of 0.13 real ($0.0243) per liter, effective from December 1 [1] Company Summary - Petrobras is implementing a price increase for jet fuel, indicating a strategic adjustment in response to market conditions [1]

Core Insights - Oil prices stabilized after a significant drop, with Brent at approximately $63.08 and WTI at around $58.80, as traders reassessed OPEC's market outlook for 2026 [1][3] - The U.S. funding deal resolution alleviated some macroeconomic concerns, but crude oil remained influenced by supply signals rather than broader market sentiment [1][5] Supply and Demand Dynamics - OPEC's updated projections indicate a shift from a deficit outlook to a neutral supply-demand balance for the upcoming year, influenced by rising non-OPEC output and moderate consumption growth [3][5] - The International Energy Agency (IEA) has outlined a softer demand trajectory, contributing to market concerns about potential surplus risks [3] Market Reactions - Diesel margins strengthened, while crude futures showed a slower recovery, with Murban trading at approximately $65.43 due to steady Asian demand [4] - A softer dollar and lower Treasury yields provided some support to commodities, but did not alter the outlook for crude supplies [6] Current Market Conditions - Traders are maintaining small positions following the recent selloff, awaiting guidance on OPEC+ output levels and demand expectations for early 2026 [6]