Will the Oil Price Environment Aid PSX's Refining Operations?

With West Texas Intermediate (WTI) oil prices currently trading below $60 per barrel, according to data from Oilprice.com, which is significantly lower than a year ago, the overall energy business is now highly uncertain. However, unlike many other energy players, Phillips 66 PSX is likely to gain from the ongoing crude pricing environment.

This is because Phillips 66 is a leading refining company. As a refining player, PSX is now able to purchase oil at a lower cost, enabling the production of end products. Additionally, crude prices are likely to remain soft in the coming days, as the U.S. Energy Information Administration (“EIA”) expects global oil inventories to continue increasing. 

EIA projects the spot average West Texas Intermediate price for 2026 at $51.42 per barrel, lower than the estimated $65.32 per barrel for 2025. Thus, Phillips 66, which generates significant margin from its refining activities, is likely to benefit from soft oil prices.

VLO & PARR Also Poised to Gain

Valero Energy Corporation VLO and Par Pacific Holdings Inc. PARR, two other well-known refiners, are also likely to benefit from the ongoing relatively low oil prices.

Valero Energy, with 15 refineries, has a throughput capacity of 3.2 million barrels per day. VLO mentioned that its refining activities are capable of generating sufficient cash flows to support shareholders’ returns along with growth.   

Par Pacific is mainly a refining company with the capacity to process 219,000 barrels of oil daily. Notably, having exposure to Canadian heavy oil, which is cheaper than lighter crude, Par Pacific is likely to have been enjoying a cost advantage.

PSX’s Price Performance, Valuation & Estimates

Shares of PSX have gained 15.4% over the past year compared with the 16.2% rise of the composite stocks belonging to the industry.

From a valuation standpoint, PSX trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 13.57X. This is above the broader industry average of 4.34X.

The Zacks Consensus Estimate for PSX’s 2025 earnings has seen downward revisions over the past 30 days.

PSX currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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