Price Forecast:

Bullish Case: Positive earnings expectations and strategic operational shifts can spur market sentiment, revealing a recovery in refining margins. Institutional support coupled with a preferential regulatory environment may also underpin price growth.

Bearish Case: Potential legal challenges and environmental regulations threaten to disrupt operations, while existing refinery closures raise concerns over capacity. Additionally, deteriorating margins may weigh heavily on financial performance leading to potential declines.

Potential Outcomes:

• Improved refining margins (40%): Supporting revenue increases.
• Legal challenges impact (30%): Uncertain future operations lead to devaluation.
• Market volatility (20%): Economic conditions may influence investor sentiment.
• Geopolitical tensions (10%): Affecting supply chains and stock performance.

Trading Oracle: Adopt a bullish strategy using a calendar spread: Sell January 110 puts and buy February 105 puts, targeting a decline in implied volatility after the January expiration. This captures near-term recovery sentiment while limiting downside risk. Consider rolling forward if volatility remains elevated, maximizing upside potential with a favorable reward-to-risk ratio.

December 21, 2024