PSX · Phillips 66
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $293.17
Note written ·
Price against the kill line
9.6% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $293.17, on record since 11 November 2026. The shares are up 10.7% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $293.17, which would put the shares within reach of the $299.39 52-week high and show them leading the S&P 500 as the war premium holds. A Q4 2026 realized refining margin above Q3's $38.00 per barrel would also show that.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Energy
Quarter to 30 September 2026, filed 28 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 50,540
- Revenue, change on a year (%)
- +46.4
- Gross margin (%)
- 19.2
- Net cash, cash less debt ($M)
- −12,682
- Price to earnings (×)
- 8.2
- Enterprise value to sales (×)
- 0.7
All filed numbers
What Phillips 66 reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) |
|---|---|---|---|
| first filed | 50,540 | +46.4 | 19.2 |
| first filed | 51,004 | +53.1 | 14.4 |
| first filed | 32,540 | +6.9 | 10.2 |
| first filed | 34,108 | +1.3 | 14.6 |
| first filed | 34,515 | −2.9 | 12.4 |
| first filed | 33,323 | −12.6 | 12.7 |
| Pre-tax income ($M) | Not reported |
| Net income ($M) four quarters: 12,576 | 5,616 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −1.6 |
| Operating cash flow ($M) | 15,028 |
| Capital spending ($M) | Not reported |
| Free cash flow ($M) | Not available |
| Cash and short-term investments ($M) | 5,848 |
| Debt ($M) non-current long-term debt and finance leases plus current debt | 18,530 |
| Net cash, cash less debt ($M) | −12,682 |
| Deferred revenue ($M) +11.6% on a year | 240 |
| Backlog, orders not yet delivered ($M) −21.4% on a year | 703 |
| Receivables ($M) | 13,231 |
| Inventory ($M) | 6,248 |
| Shareholders' equity ($M) | 34,331 |
| Market value ($M) | 103,330 |
| Enterprise value, market value plus net debt ($M) | 116,012 |
| Enterprise value to sales (×) | 0.7 |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | 8.2 |
| Price to book value (×) | 3.0 |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 1.8% of shares outstanding sold short, 3.0 days of average trading to cover, +23.7% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $6.2M |
| 12 monthsfrom | $61K | $58.5Mand 1 trade without a stated price |
The thesis
Phillips 66 still looks more likely to lag the S&P 500 than lead it over the next three months. The shares carry a war premium in refining margins, and crude's fall in November shows how quickly that premium can come out. Two things settle the call: whether the diesel crack spread stays above its $64-per-barrel one-year average, and whether an Iran agreement arrives.
CNBC reported on 12 November 2026 that Brent crude was up 1.1% at $93.73 and West Texas Intermediate (WTI) up 0.3% at $86.76 in early trading, after President Trump said "We don't need a deal with Iran." Over November, WTI is down 16% and Brent down 20%, CNBC said. WTI had settled at $88.12 on 4 November 2026, down more than 8% on the day, Yahoo Finance reported.
Fuel margins have fallen less than crude. The diesel crack spread, the gap between the diesel price and the crude price, was $84.08 per barrel against Brent on 6 November 2026, with a one-year range of $26 to $115, World Oil Monitor showed. The Energy Information Administration (EIA) said in its 10 November 2026 outlook that it expects crack spreads to remain elevated through the rest of 2026 and most of 2027.
The price reflects a partial fade of that premium. The shares closed at $258.68 on 11 November 2026, 13.6% below the 52-week intraday high of $299.39 on 19 October 2026, while the diesel crack was still above its one-year average.
Bullish and bearish views on Phillips 66
The bull case on Phillips 66 (PSX), in brief: diesel supply is still very tight. The bear case: crude is pricing out the war premium.
Bull case
- Diesel supply is still very tight. US distillate stocks fell 3.6 million barrels to 99.3 million in the week of 30 October 2026, 13% below the five-year average of 114.5 million, according to EIA figures shown by World Oil Monitor. Yahoo Finance said on 4 November 2026 that US diesel stockpiles are the lowest since 2003.
- The EIA expects margins to stay high. Its 10 November 2026 outlook projects elevated crack spreads through most of 2027 and US retail diesel at $5.25 per gallon in 2026 and $5.03 in 2027, citing refinery damage in the Middle East and Russia.
- The third quarter set a high earnings mark. On 28 October 2026 the company reported a $38.00-per-barrel realized refining margin, up from $24.08 in the second quarter. Adjusted earnings were $14.08 per share against a MarketBeat consensus of $11.79.
- The refineries ran almost flat out. Third-quarter crude utilization was 98%, with a record 41% distillate yield, and refining pre-tax income was $6,031 million (28 October 2026 release). Management guided fourth-quarter utilization to the mid-90% range.
- Fourth-quarter buybacks have to be larger. Third-quarter shareholder returns were $2,777 million, which Chief Financial Officer Kevin Mitchell put at about 45% of operating cash flow excluding working capital. The full-year policy is more than 50%. Net debt fell $3.8 billion to $12.68 billion in the quarter.
- Broker targets sit above the shares. BMO Capital cut its target to $330 from $350 on 11 November 2026. Wells Fargo's target is $346 (Overweight, 29 October 2026), Citi's is $302 (Neutral, 4 November 2026) and Morgan Stanley's is $290 (Overweight, 2 November 2026).
Bear case
- Crude is pricing out the war premium. Brent is down 20% and WTI 16% in November as of 12 November 2026, CNBC reported. Wells Fargo said on 4 November 2026 that the Democratic midterm sweep "may pressure the president to seek to end the war more quickly," Yahoo Finance reported.
- Blended refining margins have fallen hard. Trading Economics' crack spread index stood at 47.14 on 5 November 2026, down 30.12% over a month. Gasoline futures were on track for their lowest close since 10 March, Yahoo Finance said on 4 November 2026.
- Diesel prices have started to slide. New York Harbor diesel fell $0.444 to $4.757 per gallon in the week of 30 October 2026, per EIA figures on World Oil Monitor. CMB News reported on 5 November 2026 that middle-distillate margins narrowed as Persian Gulf flows showed signs of normalizing.
- Russian diesel may add East Coast supply. A first cargo of about 40,000 tons on the Agioi Fanendes was due in New York around 7 November 2026, under a Treasury license running to 7 April 2027. Larger follow-on cargoes would weigh on East Coast margins.
- The businesses outside refining weakened. Third-quarter Marketing and Specialties pre-tax income fell to $245 million from $583 million. Renewable Fuels fell to $191 million from $544 million, and Chemicals to $311 million from $404 million (28 October 2026 release).
- Bayway adds an East Coast operating risk. Phillips 66 locked out about 385 union workers at the 275,000 barrel-per-day New Jersey refinery and is running it with its own staff, Reuters reported on 20 October 2026.
- One broker target sits below the price. Evercore ISI cut its target to $220 from $250 in late October.
Price setup
The shares closed at $258.68 on 11 November 2026, below the 50-day average of $268.56 and above the 200-day average of $202.40. The 3-month price change is 11.8%. The close is 13.6% below the 52-week intraday high of $299.39 set on 19 October 2026.
The shares closed at $259.63 on 4 November 2026, fell to $247.04 on 5 November 2026 and $245.72 on 6 November 2026, then recovered to $253.02 on 9 November 2026 and $250.70 on 10 November 2026 before the 11 November 2026 close. The 52-week closing low is $127.75 on 26 December 2025, so most of the year's gain is still in the price.
Crowding in the group is visible in a 157% gain for the S&P 500 Refining & Marketing index for the year through 26 October 2026, which ZeroHedge attributed to BTIG. The next earnings report, for the fourth quarter, is not expected until about 2 February 2027.
Catalysts ahead
- 17 November 2026: Record date for the $1.33 quarterly dividend, payable 1 December 2026. Confirms the raised payout, the second dividend increase of 2026.
- ~18 November 2026 (est.): EIA Weekly Petroleum Status Report. Another distillate draw would keep stocks under 100 million barrels and support margins; builds would show supply loosening into winter.
- 8 December 2026: EIA Short-Term Energy Outlook, next release. Shows whether the EIA still expects crack spreads to stay elevated after crude's November decline.
- 31 December 2026: Refining chief Rich Harbison retires; Chris Chandler leads Refining from 1 January 2027. Marks the handover of the segment that produced $6,031 million of pre-tax income in Q3.
- ~2 February 2027 (est.): Q4 2026 report; the company has not announced a date. Shows the realized refining margin after crude's November decline and whether buybacks rose toward the full-year policy of more than 50% of operating cash flow.
What would change the view
A daily close above $293.17, which would put the shares within reach of the $299.39 52-week high and show them leading the S&P 500 as the war premium holds. A Q4 2026 realized refining margin above Q3's $38.00 per barrel would also show that.
What it trades with
Phillips 66 trades with the refiner group more than on its own news. On 27 October 2026, Marathon fell 7%, Valero 8%, Phillips 66 7% and HF Sinclair 7% while the S&P 500 rose, and none of the four had company news, TIKR reported. Benzinga described that session as a repricing of the crack spread, since refiners fell several times more than gasoline and heating oil futures.
The shares also move with crude on Iran headlines. The Energy Select Sector SPDR Fund was down more than 5% on 4 November 2026, Yahoo Finance reported.
The evidence, claim by claim (8)
- Realized refining margin was $38.00 per barrel in Q3 2026 versus $24.08 in Q2; adjusted earnings were $14.08 per share against a MarketBeat consensus of $11.79. Phillips 66 Q3 2026 earnings release (8-K exhibit 99.1); MarketBeat · as of
- Q3 crude utilization was 98% with a record 41% distillate yield; refining pre-tax income was $6,031 million. Fourth-quarter utilization is guided to the mid-90% range. Phillips 66 Q3 2026 earnings release · as of
- Quarterly revenue was $50.54 billion against $34.52 billion in the same quarter a year earlier. Phillips 66 10-Q for the period ended 30 September 2026 · as of
- The EIA expects crack spreads to remain elevated through the rest of 2026 and most of 2027, with US retail diesel at $5.25 per gallon in 2026 and $5.03 in 2027. EIA Short-Term Energy Outlook, released 10 November 2026 · as of
- WTI crude settled at $88.12 a barrel on 4 November 2026, down more than 8% on the day and about 15% over three days. Yahoo Finance, 4 November 2026 · as of
- The diesel crack spread against Brent was $84.08 per barrel, against a one-year range of $26 to $115 and a one-year average of $64. World Oil Monitor diesel dashboard · as of
- US distillate stocks fell 3.6 million barrels to 99.3 million in the week of 30 October 2026, 13% below the five-year average of 114.5 million. EIA figures via World Oil Monitor · as of
- BMO Capital cut its price target on Phillips 66 to $330 from $350. Company news feed, 11 November 2026 · as of
Sources
- Oil prices mixed after Trump says no Iran deal needed: 'We've got their Strait' · cnbc.com ·
- eia.gov ·
- Oil prices fall below $90 as traders bet on Iran war ending after Democrats sweep midterms · finance.yahoo.com ·
- Diesel Market Dashboard: Futures, Crack Spread, Stocks · worldoilmonitor.com
- TE Crack Spread Index - Price - Chart - Historical Data · tradingeconomics.com
- Marathon Petroleum Sinks 7%, Valero Down 8%, Phillips 66 Down 7% as Refiners Slide Together · finance.yahoo.com ·
- Refiner Stocks Post Worst Day Since April 2025 Tariff Shock · benzinga.com
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