Valero Energy Surges 3.8% Amid Venezuela Oil Shifts: What's Fueling This Rally?

Summary
• Valero Energy (VLO) surges 3.79% to $188.63, hitting an intraday high of $189.72
• Options volume spikes with 152,202 contracts traded, signaling heightened speculative activity
• Venezuela oil access and refining margin optimism dominate market sentiment

Valero Energy’s sharp intraday rally reflects a confluence of geopolitical tailwinds and refining sector dynamics. With crude prices stabilizing and U.S. refiners poised to benefit from Venezuelan oil flows, VLO’s 3.79% surge underscores investor anticipation of margin expansion. The stock’s 52-week high of $192 looms as a critical psychological threshold, while options activity highlights aggressive positioning ahead of its January 29 earnings report.

Venezuela Oil Access and Refining Margins Drive VLO's Rally
Valero Energy’s intraday surge is directly tied to U.S. government actions in Venezuela, which have unlocked access to discounted crude oil for domestic refiners. With crude prices at $52.21/bbl (EIA 2026 forecast), refining margins for companies like VLO—operating 3.2 million barrels/day capacity—expand as input costs decline. The stock’s 3.79% gain aligns with broader refining sector optimism, as Venezuela’s 1 million barrels/day production restarts provide a cost-advantaged feedstock. This dynamic is amplified by VLO’s strategic positioning to process heavy crude, a core competency honed during its 2014-2016 Gulf Coast expansion.

Energy Sector Rally: VLO Outperforms Peers
The energy refining sector (XLE) gained 2.1% on the day, but Valero Energy outperformed with a 3.79% rally. Marathon Petroleum (MPC) rose 2.94%, while Phillips 66 (PSX) advanced 3.06%. VLO’s outperformance stems from its 3.2 million barrels/day refining capacity—largest in North America—and its exposure to Venezuelan heavy crude, which offers a $5-7/bbl cost advantage over U.S. shale. The stock’s 35.63 P/E ratio also reflects stronger near-term margin visibility compared to peers.

Options Playbook: High-Leverage Calls and Strategic Puts for VLO
• MACD: 3.40 (bullish divergence), RSI: 67.02 (overbought), 200-day MA: $149.12 (far below)
• Bollinger Bands: $189.96 (upper), $170.72 (middle), $151.47 (lower)
• 30D Support: $162.53–$163.12, 200D Support: $161.87–$163.60
VLO’s technicals suggest a continuation of its bullish momentum. The stock is trading above its 30D and 100D moving averages, with RSI near overbought territory but MACD showing strengthening momentum. Key resistance lies at $189.96 (Bollinger upper band) and $192 (52-week high). Aggressive bulls should target the $180 call options (VLO20260123C180) for leveraged exposure, while cautious investors may hedge with the $187.5 put (VLO20260123P187.5) to protect against a pullback.
• VLO20260123C180: Call option with 46.00% IV, 17.90% leverage, delta 0.7295, theta -0.4219, gamma 0.0231, turnover 7,000
- High leverage amplifies returns if VLO breaks $180
- Moderate delta ensures sensitivity to price moves
- Strong gamma means delta increases as the stock rises
• VLO20260123P187.5: Put option with 36.18% IV, 44.65% leverage, delta -0.4682, theta -0.0588, gamma 0.0353, turnover 10,508
- Provides downside protection at a key support level
- High leverage cushions losses if VLO dips below $187.5
- Strong gamma ensures delta adjusts rapidly to price changes
Under a 5% upside scenario (VLO at $197.54), the VLO20260123C180 call would yield a 164.52% payoff. For the put, a 5% downside (VLO at $179.15) would result in a 33.17% payoff. These options balance risk and reward, ideal for a volatile pre-earnings environment.

Backtest Valero Energy Stock Performance
The backtest of Vanguard Total Stock Market ETF (VLO) after a 4% intraday increase from 2022 to now shows favorable performance metrics. The 3-Day win rate is 52.67%, the 10-Day win rate is 56.49%, and the 30-Day win rate is 55.53%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 5.70% over 30 days, suggesting that VLO can deliver decent gains even after the initial 4% surge.

VLO's Momentum: Position for a Volatile January
Valero Energy’s rally is poised to continue as Venezuela oil flows normalize and refining margins expand. The stock’s 3.79% gain today reflects strong technical momentum, with the 52-week high ($192) and $189.96 Bollinger upper band as immediate targets. Investors should monitor the $180 level for call option liquidity and the $187.5 support for put protection. Marathon Petroleum (MPC)’s 2.94% rise underscores sector strength, but VLO’s refining scale and strategic crude access make it the top play. Aggressive bulls may consider VLO20260123C180 into a break above $180, while cautious traders should watch for a pullback to $170.72 (Bollinger middle band) as a potential entry point.