Oil refiner stocks make a strong commodity play amid crude oil's rout, CNBC "Fast Money" trader Jon Najarian said on Thursday.
"We're going to have an oversupply situation for quite a while. That's good if you're a refiner," he said.
Sustained oversupply and a strengthening dollar relative to key global currencies have pressured U.S. crude prices this year. The commodity has shed nearly 20 percent year-to-date and more than 50 percent in the last 12 months.
CNBC "Fast Money" traders discussed how to trade oil's continued weakness.
Najarian pointed to four refiners that could rally if the low-price environment continues:
- 1. HollyFrontier: Shares in the Texas-based company fell more than 1 percent to roughly $41 per share on Thursday.
- 2. Western Refining: The stock fell more than 0.5 percent, around $50 per share, on Thursday.
- 3. Tesoro: The refiner dropped about half a percent, closing Thursday above $93 per share. Trader Guy Adami noted Tesoro shares have enjoyed a great run, climbing more than 80 percent in the last year.
- 4. Valero: The stock fell nearly 2 percent on Thursday, below $61 per share.
Exploration and production
Adami said giants Exxon Mobil and ConocoPhillips showed "false" rallies when they climbed on Wednesday. Exxon and Conoco both fell more than 1 percent on Thursday to sit near $84 and $62 per share, respectively.
"If money starts flowing into someplace, it's going to flow into the commodities," trader Brian Kelly said. He bought the iShares S&P GSCI Commodities-Indexed Trust on Thursday, which tracks futures in a broad range of commodities.
It dropped more than 2 percent on Thursday to sit around $19.