Refiner Phillips 66 Beats Profit Estimates on Strong Fuel Demand

(Reuters) – Refiner Phillips 66 beat quarterly profit estimates on Wednesday, helped by sustained fuel demand and strong performance in its midstream and chemical units.

Global fuel supplies have remained constrained despite a rise in refining capacity due to production cuts by OPEC+ countries and the Russia-Ukraine war.

Earnings from Phillips’ chemicals segment more than doubled to $106 million, while earnings from its pipeline unit also rose. The company’s shares rose 2% in premarket trading.

Phillips, which is under pressure from activist investment firm Elliott Investment Management over a jump in its operating expenses, said crude capacity utilization increased to 92%.

Realized margins fell to $14.41 per barrel in the fourth quarter, from $19.73 a year-earlier, due to a decline in fuel prices.

The drop in prices was offset by inventory hedging, higher Gulf Coast clean product realizations and strong commercial sales.

The Houston, Texas-based refiner reported adjusted earnings of $3.09 per share, compared with analysts’ average estimate of $2.35 per share, according to LSEG data.

Rivals Valero Energy  and Marathon Petroleum  also topped Wall Street’s expectations with stronger-than-expected margins.

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