On Wednesday, Phillips 66 (NYSE:PSX) reported a substantial 46% drop in its second-quarter profits, reflecting the challenges faced by U.S. refiners due to declining margins. This decline comes after last year’s record-high margins, which were boosted by a surge in fuel demand and supply constraints caused by the pandemic-driven refinery closures and the global oil market disruptions resulting from Russia’s invasion of Ukraine.
The company’s premarket trade showed its shares falling 1.2% to $110.80.
During the second quarter, Phillips 66‘s (NYSE:PSX) realized margins plummeted to $15.32 per barrel, a significant decrease from the $28.62 per barrel reported in the same period last year.
Despite the decline in margins, fuel demand has proven to be resilient. The April-June quarter typically witnesses robust demand, as companies ramp up gasoline and jet fuel production to cater to the summer vacation season.
In the second quarter, Phillips 66’s (NYSE:PSX) crude utilization rate was recorded at 93%, slightly higher than the 90% rate from the previous year. Additionally, the total processed input remained unchanged year-over-year at 1.9 million barrels per day (bpd).
On an adjusted basis, the Houston-based refiner reported earnings of $3.87 per share for the three months ended June 30, surpassing the average analysts’ estimate of $3.56, as per Refinitiv data.
Similar to Phillips 66, rivals Valero Energy Corp (NYSE:VLO) and Marathon Petroleum (NYSE:MPC) also reported considerable declines in quarterly profits due to pressure on margins. However, both companies managed to outperform market expectations.
Overall, Phillips 66’s (NYSE:PSX) net income for the second quarter stood at $1.7 billion, or $3.72 per share, down from $3.2 billion, or $6.53 per share, during the same period last year.
Featured Image: Unsplash @ Stephen Leonardi
Author Faith Yakubu 
