Phillips 66 mentioned Monday its first quarter outcomes will embody round $900 million in pre-tax mark-to-market losses because of the refiner taking a brief place in derivatives contracts.
“The sharp enhance in commodity costs in the course of the first quarter resulted in a internet outflow of roughly $3 billion of money collateral on spinoff positions”, the Houston, Texas-based firm mentioned in a inventory submitting.
“To handle these impacts, the corporate drew on its dedicated and uncommitted traces of credit score, issued and totally drew a brand new $2.25 billion 364-day time period mortgage and upsized its accounts receivables securitization facility from $1.25 billion to $1.75 billion”.
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The US Vitality Data Administration’s (EIA) newest “Brief-Time period Vitality Outlook”, launched March 10, forecast Brent crude costs would keep above $95 a barrel over the following two months, the best ranges since September 2023, as a result of ongoing battle within the Center East.
Brent costs might fall to $80 per barrel within the third quarter of 2026 and round $70 per barrel, the EIA mentioned.
“The first danger that might trigger oil costs to proceed rising is an prolonged closure of the Strait of Hormuz, which is a serious world oil transit chokepoint by means of which almost 20 % of worldwide oil provide flows”, the EIA mentioned.
“As soon as oil flows are reestablished by means of the Strait of Hormuz, we count on world oil manufacturing will proceed to outpace consumption over our forecast interval, leading to world oil inventories rising by a mean of 1.9 million barrels per day (b/d) in 2026 and by 3.0 million b/d in 2027”, the EIA added.
“Rising oil inventories will once more start to weigh on oil costs, and we count on the Brent worth will fall to a mean of $70/b in 4Q26 and $64/b in 2027”.
Phillips 66′ internet brief place in crude and oil merchandise dedicated to the derivatives market stood at about 50 million barrels as of March, in response to the disclosure with the U.S. Securities and Change Fee.
Phillips 66 famous that “the related enhance in present market worth of the underlying bodily stock is just not mirrored in e book worth”.
“[T]he firm routinely carries a internet brief place in crude oil, refined petroleum merchandise, pure fuel liquids and renewables feedstocks-related spinoff contracts. The corporate’s observe is to make the most of these brief spinoff positions as financial hedges to handle worth danger for sure of its bodily positions related to its belongings”, it defined.
Phillips 66’s core refining section is predicted to bear $350-450 million of the losses.
Furthermore, the section is predicted to log a unfavourable impression of about $300 million earlier than taxation “from the usual two-week lag in Gulf Coast clear merchandise pricing”, Phillips 66 mentioned.
The midstream section has additionally been negatively impacted by downtime brought on by Winter Storm Fern, “in addition to accelerated depreciation related to a Permian Basin fuel plant”, it added.
“Chemical compounds section International O&P utilization was impacted by decreased operations at CPChem’s Center East joint ventures.
“Advertising & Specialties section margins have been adversely impacted by sharply rising spot costs”.
Phillips 66 mentioned it’s “well-positioned to handle additional commodity worth volatility by means of ample liquidity and money generated from operations”.
“As of March 31, 2026, the corporate had roughly $6 billion of liquidity, reflecting $5 billion of money and money equivalents and whole dedicated capability out there underneath credit score services of $1 billion”, the submitting acknowledged.
“Whole debt was roughly $27 billion and internet debt was $22 billion at March 31, 2026. The corporate stays dedicated to a complete debt goal of $17 billion by finish of 2027”.
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