Phillips 66 refineries run strong into weak margins

OREANDA-NEWS. August 01, 2016. Phillips 66 refineries ran at maximum rates during a second quarter savaged by oversupply, the company reported today.

Refinery utilization reached 100pc during the second quarter but profits for the business fell by 75pc compared to the same quarter last year. The decline was sharpest in the US Gulf coast, where refining profits fell by 94pc compared to the same quarter of 2015.

Rising crude prices during the quarter meant prices for secondary products, including petroleum coke and sulphur, withered.

Increased global gasoline and diesel production meanwhile easily met higher demand during the quarter and filled US storage.

Refiners will cut throughputs and restore balance between supply and demand through the rest of the year, chief executive Greg Garland said.

"My personal view is we've got a lot of inventory stacked up," he said. "I think the industry's going to be facing run cuts in the second half of the year."

Storage economics had helped create particular pressure on the US Atlantic coast, where Phillips 66 operates the 250,000 b/d Bayway refinery in Linden, New Jersey, the company said. The arbitrage helped stuff US Atlantic coast inventories with European gasoline, refining president Tim Taylor said.

"No matter how you cut it, some place, you've got to get the production and demand back in balance," Taylor said. "That's why we anticipate that run cuts come and that would be one of the places that we look at, that we think that could occur."

Phillips 66 exported 174,000 b/d of gasoline and diesel during the quarter, up from 140,000 b/d in the same quarter last year. The company's marketing business reported a 26pc increase in profit compared to the same quarter last year, to \\$229mn.

Phillips 66 reported a \\$499mn profit for the quarter, down from \\$1bn in the same quarter of 2015.

2501702