We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Phillips 66 faces high crude costs, but strong fuel demand and tight inventories support refining margins.
PSX's midstream exposure adds stable cash flows and reduces vulnerability to commodity price volatility.
PSX's shares rose 101.5% in the past year, while 2026 earnings estimates were revised higher recently.
With West Texas Intermediate (WTI) oil prices currently hovering around $100 per barrel, according to Oilprice.com, and owing to the conflicts in the Middle East, the overall energy business is uncertain.
The U.S. Energy Information Administration (“EIA”) projects the spot average West Texas Intermediate price for 2026 at $84.65 per barrel, higher than $65.40 in 2025. Thus, Phillips 66 (PSX - Free Report) , which generates significant margin from its refining activities, is likely to be hurt by high oil prices. Despite the high input cost, the refining business environment is highly profitable as demand for fuels remained strong, while global fuel inventories stayed relatively tight.
Investors should also know that although a leading refiner, PSX, unlike most of its refining peers, has diversified its business across midstream and chemicals. Along with investing in refining operations, Phillips 66 is allocating a significant amount of capital to midstream.
Midstream business, by its very definition, is stable since it generates stable cash flows as the assets are being utilized by shippers for the long term, and is less vulnerable to commodity price volatility. Hence, having a diversified business model, Phillips 66 is insulated from commodity price volatility to a great extent.
DINO & PARR Poised to Gain
HF Sinclair (DINO - Free Report) and Par Pacific Holdings Inc. (PARR - Free Report) , two other well-known refiners, are also likely to benefit from the ongoing favorable refining business.
On its second-quarter 2026 call,HF Sinclair mentioned that wars in the Middle East and Ukraine have disrupted refining capacities. DINO stated that inventories of fuel in the United States and in its key operating regions are low, especially when the demand for the end products remains healthy, thereby creating opportunities to earn healthy refining margins.
Par Pacific continued to benefit from a strong refining market at the start of the third quarter. Its refining index, which is a rough measure of how profitable it is to turn crude oil into products like gasoline and diesel, was still very high in July at $31.34 per barrel, only slightly below the second-quarter average of about $33.
Demand for fuels remained strong, especially on the mainland, while global fuel inventories stayed relatively tight. In simple terms, there was still healthy demand for refined products and limited excess supply, which helped PARR continue earning attractive margins from its refineries.
PSX’s Price Performance, Valuation & Estimates
Shares of PSX have gained 101.5% over the past year compared with the 118.8% rise of the composite stocks belonging to the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, PSX trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 11.75X. This is above the broader industry average of 5.94X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PSX’s 2026 earnings has gone up over the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
Phillips 66: Resilient Refining Meets Midstream Stability
Key Takeaways
With West Texas Intermediate (WTI) oil prices currently hovering around $100 per barrel, according to Oilprice.com, and owing to the conflicts in the Middle East, the overall energy business is uncertain.
The U.S. Energy Information Administration (“EIA”) projects the spot average West Texas Intermediate price for 2026 at $84.65 per barrel, higher than $65.40 in 2025. Thus, Phillips 66 (PSX - Free Report) , which generates significant margin from its refining activities, is likely to be hurt by high oil prices. Despite the high input cost, the refining business environment is highly profitable as demand for fuels remained strong, while global fuel inventories stayed relatively tight.
Investors should also know that although a leading refiner, PSX, unlike most of its refining peers, has diversified its business across midstream and chemicals. Along with investing in refining operations, Phillips 66 is allocating a significant amount of capital to midstream.
Midstream business, by its very definition, is stable since it generates stable cash flows as the assets are being utilized by shippers for the long term, and is less vulnerable to commodity price volatility. Hence, having a diversified business model, Phillips 66 is insulated from commodity price volatility to a great extent.
DINO & PARR Poised to Gain
HF Sinclair (DINO - Free Report) and Par Pacific Holdings Inc. (PARR - Free Report) , two other well-known refiners, are also likely to benefit from the ongoing favorable refining business.
On its second-quarter 2026 call,HF Sinclair mentioned that wars in the Middle East and Ukraine have disrupted refining capacities. DINO stated that inventories of fuel in the United States and in its key operating regions are low, especially when the demand for the end products remains healthy, thereby creating opportunities to earn healthy refining margins.
Par Pacific continued to benefit from a strong refining market at the start of the third quarter. Its refining index, which is a rough measure of how profitable it is to turn crude oil into products like gasoline and diesel, was still very high in July at $31.34 per barrel, only slightly below the second-quarter average of about $33.
Demand for fuels remained strong, especially on the mainland, while global fuel inventories stayed relatively tight. In simple terms, there was still healthy demand for refined products and limited excess supply, which helped PARR continue earning attractive margins from its refineries.
PSX’s Price Performance, Valuation & Estimates
Shares of PSX have gained 101.5% over the past year compared with the 118.8% rise of the composite stocks belonging to the industry.
From a valuation standpoint, PSX trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 11.75X. This is above the broader industry average of 5.94X.
The Zacks Consensus Estimate for PSX’s 2026 earnings has gone up over the past seven days.
Phillips 66 currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.