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Phillips 66 (PSX) Postpones Planned Maintenance on Refinery

Zacks Equity Research

Phillips 66 PSX announced that it has postponed a planned maintenance on a sulfur recovery unit (SRU) in its 146,000 barrel-per-day Borger, TX, refinery. The scheduled maintenance was to be conducted on Aug 26. We feel this delay may put pressure on the price of oil-based products like gasoline and diesel. This is solely due to the fact that any cut down in refinery production will give boost to price rise at a time when globally there is a huge surplus stock of gasoline and diesel.

Phillips 66 – through its extensive infrastructural network – manages 15,000 miles of crude oil, petroleum product and NGL pipeline, 42 finished product terminals, eight liquefied petroleum gas terminals, five crude oil terminals, and one coke exporting facility. The company’s vast range of operations should continue to increase revenues and boost shareholder value in the to-be-reported quarter as well as in the coming years.

Phillips 66 remains focused on its supply chain network. To this end, the company invests heavily in transportation and logistics assets. This should enhance its crude extraction capabilities from sources round the globe, thereby boosting its earnings.

However, Phillips 66’s performance is dependent on sourcing crude from suppliers worldwide. Hence, a steady supply is mandatory for the company to maintain its production volume. Any geo-political disturbance globally can render its refineries idle and hamper its top-line growth.

Also, the company’s profitability depends on the spread between the margins of refined product prices and crude oil feedstock prices. It is also contingent on a host of macro factors that are outside the domain of its control.

PHILLIPS 66 Price

 

PHILLIPS 66 Price | PHILLIPS 66 Quote

Moreover, Phillips 66’s chemicals business operates in a highly volatile industry where sales prices are always fluctuating. Notably, the company’s profitability in such a sector is not always guaranteed by controlling prices of raw materials only.

The company currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked players from the energy sector are Devon Energy Corporation DVN, NGL Energy Partners LP NGL and Enbridge Energy Partners L.P. EEP. All these stocks sport a Zacks Rank #1 (Strong Buy).

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