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UPDATE 1-U.S. refining shares soar on vaccine news, hopes for renewed fuel demand

(Updates share prices, adds context on refining demand)

Nov 9 (Reuters) - U.S. refining stocks soared on Monday after pharmaceutical company Pfizer said it had developed a vaccine that was more than 90% effective in preventing COVID-19.

Fuel demand has been hit hard by the coronavirus, which has killed more than a million people worldwide and infected 50 million. In the United States, fuel demand is down 13% this year, with motor gasoline consumption down by the same amount as millions of people shifted to in-home work while millions of others are unemployed.

Several North American refineries have announced plans to close as a result of the pandemic-induced slump in demand.

Oil company shares dropped in the spring and have been slow to recover, and the recent worldwide resurgence in COVID-19 cases is causing numerous countries to lock down again, once again tamping down fuel demand. The S&P 500 Energy sector was down 52% for the year coming into Monday trading.

Shares of refiners PBF Energy and Valero gained 35% and 31%, respectively, in midday trading on Monday, while Marathon Petroleum’s stock traded up 17%.

Refiners are hinging hopes on the speedy return in demand for products such as gasoline, jet fuel and diesel, according to comments made by executives on their third-quarter earnings calls.

“The problem was the product markets and especially the overhang of surplus jet fuel ... we believe that’s where the vaccine will be most effective,” said Manav Gupta, refining analyst at Credit Suisse.

If jet fuel demand can pick up, diesel inventory will draw and margins will stabilize, Gupta added.

However, energy consultancy Tudor, Pickering, Holt and Co said Monday’s rally in refining shares is likely “well overdone” given that the industry had been receiving positive news on vaccines throughout the fall.

“Did anyone really doubt we would not see a vaccine at some point?” Matthew Blair, TPH analyst, wrote in a note.

Blair noted that refining margins have barely moved on the news, with NYMEX gasoline crack spreads up 32 cents per barrel to $6.41, while diesel spreads were down 5 cents per barrel to $8.48.

“Even with a vaccine, we still face structural demand losses in gasoline and jet, with some people continuing to work from home, and Zoom calls replacing business trips,” Blair wrote. (Reporting by Laura Sanicola Editing by Paul Simao and Nick Zieminski)

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