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Phillips 66 Stock, 3-2-1 Crack, and SPY: What Do They Indicate?

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Oct. 17 2017, Updated 7:05 p.m. ET

Phillips 66 stock performance

In the earlier parts of this series, we looked at Phillips 66’s (PSX) 3Q17 estimates and refining margin expectations. Now we’ll evaluate PSX’s stock performance before its results, which are expected to be released on October 27, 2017.

Since July 3, 2017, Phillips 66 stock has risen 13.3%. By comparison, the SPDR S&P 500 ETF (SPY) has risen 5.3%. The US Gulf Coast WTI (West Texas Intermediate) 3-2-1 crack widened a significant 19.8% since July 3, 2017. The US Gulf Coast is a significant refining area for Phillips 66 (PSX) and accounted for 34.0% of its crude oil throughput in 2016. So a rise in the benchmark crack in the area points to a possible rise in PSX’s refining margin since July 3.

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The steep rise in the USGC (United States Geological Survey) crack is because of Hurricane Harvey, which hit Texas on August 26, 2017. Harvey impacted around 30.0% of refining capacities in the United States. The crack, which was $15.40 per barrel on July 3, 2017, rose to a high of $35.20 per barrel on September 1, 2017. Now the crack has fallen to $18.50 per barrel, but it’s still higher than what we saw on July 3.

Earlier in the stated period, PSX posted its 2Q17 earnings, which surpassed analysts’ estimates. For more on this, please refer to Phillips 66’s 2Q17 Earnings Beat Estimates, Stock Rose 2.2%.

Overall, the rise in Phillips 66 stock was most likely due to the impact of Hurricane Harvey, which led to higher cracks. That was after the rise in the stock due to presumably better 2Q17 numbers.

Peers’ stock performances

Since July 3, 2017, MPC, ANDV, and VLO have risen 6.2%, 10.9%, and 14.8%, respectively. HollyFrontier (HFC) and PBF Energy (PBF) have risen even more sharply, by 29.8% and 19.9%, respectively, in the same period.

In the next part of this series, we’ll examine how Phillips 66’s moving averages are trending before its 3Q17 earnings release.

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