Released October 30, 2024 | SUGAR LAND
en
Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Amid a deep decline in profits from the process of refining crude oil, Phillips 66 (NYSE:PSX) (Houston, Texas) on Tuesday reported a substantial drop in earnings during the third quarter.
Phillips 66 reported $346 million in earnings during the three-month period ending September 30, a stunning 65% decline from the previous quarter. Despite conflicts in the Middle East, crude oil prices are on the decline amid sluggish global demand.
Forecasts for the price of crude were moved lower recently amid a cooling in the global economy. The U.S. Energy Information Administration (EIA), the data arm of the Energy Department, in its October market report lowered its forecast for Brent crude oil by $7 per barrel to $78 per barrel, reflecting "a reduction for global oil demand growth in 2025."
That, in turn, is spilling over to refiners. Refining margins are moving lower, along with the rest of the commodities sector. In mid-October, EIA noted that refining margins have been below the five-year average since early this year and continued to falter through early fall. Margins last month were the lowest in a quarter century.
That was apparent in the quarterly earnings from Phillips 66, among the largest U.S. refiners. It posted a $108 million loss from its refining segment, compared with a profit of $302 million during the second quarter.
The EIA added that margins, otherwise known as crack spreads, are off largely on a slump in demand for distillate fuel oil. Consumption through September was down 6% from year-ago levels, largely due to a weak manufacturing sector and an increase in the use of biofuels, which have largely displaced diesel on the West Coast.
The West Coast has proven problematic more recently for refiners after California Gov. Gavin Newsom signed off on legislation mandating that refiners maintain fuel storage for the tacit purpose of controlling prices.
Citing "market dynamics" and questions about the long-term future of its refinery, Phillips 66 said it would shutter operations at its Los Angeles complex by the fourth quarter of next year. For more information, see October 18, 2024, article - California Gas Policy Under Scrutiny after Phillips 66 Closure.
Those plants can yield as much as 85,000 barrels of gasoline per day, though the company said it could make up any shortfalls by supplies from its renewable fuels complex in the San Francisco Bay area.
But its renewables faltered too. The company reported a $116 million loss from its renewable fuels division, nearly twice as much as during the second quarter.
Mark Lashier, the head of Phillips 66, remained upbeat despite the poor returns.
"Our commitment to operational excellence and disciplined capital allocation continues to create long-term shareholder value," he said in a statement.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
Phillips 66 reported $346 million in earnings during the three-month period ending September 30, a stunning 65% decline from the previous quarter. Despite conflicts in the Middle East, crude oil prices are on the decline amid sluggish global demand.
Forecasts for the price of crude were moved lower recently amid a cooling in the global economy. The U.S. Energy Information Administration (EIA), the data arm of the Energy Department, in its October market report lowered its forecast for Brent crude oil by $7 per barrel to $78 per barrel, reflecting "a reduction for global oil demand growth in 2025."
That, in turn, is spilling over to refiners. Refining margins are moving lower, along with the rest of the commodities sector. In mid-October, EIA noted that refining margins have been below the five-year average since early this year and continued to falter through early fall. Margins last month were the lowest in a quarter century.
That was apparent in the quarterly earnings from Phillips 66, among the largest U.S. refiners. It posted a $108 million loss from its refining segment, compared with a profit of $302 million during the second quarter.
The EIA added that margins, otherwise known as crack spreads, are off largely on a slump in demand for distillate fuel oil. Consumption through September was down 6% from year-ago levels, largely due to a weak manufacturing sector and an increase in the use of biofuels, which have largely displaced diesel on the West Coast.
The West Coast has proven problematic more recently for refiners after California Gov. Gavin Newsom signed off on legislation mandating that refiners maintain fuel storage for the tacit purpose of controlling prices.
Citing "market dynamics" and questions about the long-term future of its refinery, Phillips 66 said it would shutter operations at its Los Angeles complex by the fourth quarter of next year. For more information, see October 18, 2024, article - California Gas Policy Under Scrutiny after Phillips 66 Closure.
Those plants can yield as much as 85,000 barrels of gasoline per day, though the company said it could make up any shortfalls by supplies from its renewable fuels complex in the San Francisco Bay area.
But its renewables faltered too. The company reported a $116 million loss from its renewable fuels division, nearly twice as much as during the second quarter.
Mark Lashier, the head of Phillips 66, remained upbeat despite the poor returns.
"Our commitment to operational excellence and disciplined capital allocation continues to create long-term shareholder value," he said in a statement.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
