Reasons Why PSX's Midstream Portfolio Offsets Elevated Crude Prices

Phillips 66 PSX is poised to benefit from the ongoing softness in crude oil prices on its business model, which enables it to purchase raw materials at a cheaper rate. According to data released by the U.S. Energy Information Administration (EIA), the West Texas Intermediate (WTI) spot crude price average is expected to fall from $65.40 per barrel in 2025 to $53.42 in 2026 and to $49.34 in 2027, benefiting the leading refining player.

However, to shield its business from crude price volatility, PSX has expanded into the midstream segment, which generates stable, fee-based revenues. By leasing midstream assets to shippers, the refining player secures predictable cash flows, regardless of actual utilization.

Phillips 66 has been steadily reinforcing its midstream segment. Since the first quarter of 2022, the company has consistently invested in the segment, highlighted by the Pinnacle and Coastal Bend acquisitions and expansions, along with the recent Dos Picos 2 expansion. Several midstream growth projects are in progress, with most expected to be complete by 2027, including some in late 2026.

How PBF & PSX Stand Ahead of VLO

PBF Energy Inc. PBF and Valero Energy Corporation VLO are two other downstream players with a diversified refinery footprint. By virtue of their business models, PBF and VLO are set to benefit from the softness in crude prices in the coming days, per the EIA. PBF, unlike VLO, has diversified into the midstream segment, positioning it to benefit in a high crude price environment.

However, PSX appears better positioned than PBF to weather high crude prices, supported by its more robust midstream footprint.

PSX’s Price Performance, Valuation & Estimates

Shares of Phillips 66 have gained 19.7% over the past year compared with the 24.1% rally 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 13.1X. This is above the broader industry average of 5.08X.

The Zacks Consensus Estimate for the first and second quarters of 2026 has been unchanged over the past seven days. Meanwhile, for 2026, PSX's earnings estimates have seen upward revisions.

Phillips 66 currently carry a Zacks Rank #3 (Hold). 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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