Phillips 66 posts third straight loss as pandemic destroys fuel demand

10/30/2020 | 06:24am

Oct 30 (Reuters) - Phillips 66 reported its third straight quarterly loss on Friday, hit by the COVID-19 pandemic that has destroyed fuel demand and knocked roughly 3.4 million barrels per day of refining capacity off the market worldwide.

Oil refiners around the world have been forced to cut fuel production, reeling from months of lackluster demand as virus-led lockdowns shattered the need for travel.

While demand for fuel had picked up earlier in the quarter, fresh travel lockdowns due to a resurgence of coronavirus infections are threatening the recovery.

Phillips 66 said that almost two million barrels per day (bpd) of refinery capacity globally has been permanently shuttered, while another 1.4 million bpd of capacity was temporarily out of commission or being converted into terminal and other facilities.

The company's own worldwide crude utilization rate was 77% in the third quarter, up from 75% in the second quarter, but still well below last year's 97%.

In October, utilization has been in the mid-60% range, impacted by downtime at the Lake Charles and Alliance refineries in Louisiana.

Realized refining margins slumped to $1.78 per barrel, 84% lower than last year.

Phillips 66 posted a net loss of $799 million, or $1.82 per share, for the quarter ended Sept. 30, compared with a year-ago profit of $712 million, or $1.58 per share.

That included impairment charges of $798 million related to the reconfiguration of its crude oil refinery in Rodeo, California to produce renewable fuels, which are made from used cooking oil and fats, among others.

On an adjusted basis, it lost a cent per share, smaller than average analysts' estimate of 80 cents, according to Refinitiv IBES.

This was helped by better-than-expected margins at its marketing and specialties unit, which buys refined products wholesale to resell at its outlets. (Reporting by Arunima Kumar in Bengaluru, Editing by Sherry Jacob-Phillips and Shailesh Kuber)

© Reuters 2020
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