Where Will Phillips 66 Be in a Year?
Energy stocks are facing significant headwinds. With unprecedented restrictions on travel and movement across most countries, the demand for gasoline and other fuels has decreased dramatically. This is a severe blow for energy companies that were already grappling with a supply glut and low commodity prices. While the outlook for oil stocks looks bleak, it may not be really all that bad. The International Energy Agency expects oil demand to start recovering gradually in the second-half of 2020.
In the meantime, refining stocks may benefit from the lower crude prices. While lower gasoline demand affects refiners negatively, lower input costs are advantageous for them. Further, widened differentials between Brent and American crudes benefit refiners, as their output prices are generally benchmarked against the stronger Brent prices. Still, things will be challenging for refiners with global oil demand estimated to be down by around 25% in the first half of 2020. However, there are reasons why top refiner Phillips 66 (NYSE: PSX) may emerge stronger at the end of the coronavirus crisis.
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Source Fool.com
