(Reuters) -U.S. oil refiner Phillips 66 on Monday set its 2021 capital budget at $1.7 billion, around 43% lower than forecast for the previous year, as the energy industry struggles to recover from the blow of the COVID-19 pandemic.
The coronavirus crisis and resulting lockdowns upended global travel and fuel demand, creating a supply glut that pushed U.S. crude oil prices briefly into negative territory in April.
West Texas Intermediate crude futures have recovered much of those losses on the back of COVID-19 vaccine progress, although they have shed about 23% of their value so far this year.
Phillips 66 Chief Executive Officer Greg Garland on Monday warned that market conditions remain challenging, even as smaller rival HollyFrontier Corp last month outlined plans to double its spending next year, counting on an expected recovery in fuel demand.
Garland said the company’s focus will be on cutting expenditures and for 2021, it will prioritize completion of projects in progress and renewable fuels, which have seen a demand surge this year.
Phillips 66 said its 2021 budget includes capital expenditures of $776 million on the refining segment and $610 million on midstream.
Including contributions from affiliates, the company’s adjusted 2021 capital program will be about $2.38 billion, below 2020’s forecast of $2.9 billion.