Short interest in Phillips 66
Short interest in Phillips 66 (PSX) as a percentage of its outstanding shares has risen marginally from 1.0% on October 31 to its current level of 1.1%.
Usually, with all else being equal, a rise in short interest could mean an increase in bearish sentiments for a stock. In the same period, Phillips 66 stock has fallen 11.2%.
Why the change in bearish sentiments?
The marginal rise in short interest in Phillips 66 could be the result of a weaker refining environment partly offset by better-than-expected third-quarter earnings. As we discussed earlier in this series, the benchmark USGC (US Gulf Coast) WTI 3-2-1 refining crack has fallen in the current quarter, which could affect Phillips 66’s refining margin and earnings. Thus, an expectation of lower earnings could have raised negative sentiments for the stock.
However, Phillips 66 posted a better set of third-quarter numbers. Phillips 66’s adjusted earnings rose due to an across-the-board rise in its segmental earnings. Adjusted net earnings from the Midstream, Chemicals, Refining, and Marketing segments rose year-over-year in the third quarter. For more on this, read Phillips 66’s Third-Quarter Earnings Beat the Estimates.
Peers’ short interests
The short interests in Phillips 66’s peers HollyFrontier (HFC) and PBF Energy (PBF) have risen 0.1% and 1.4%, respectively, since October 31. Currently, the short interests in HollyFrontier and PBF stand at 4.7% and 5.6%, respectively. However, short interest in Delek US Holdings (DK) has fallen 0.1% over October 31 to its current level of 6.4%.
If we consider its stock price movement since October 1, Delek has risen 4.8%. HollyFrontier and PBF Energy have fallen 10.8% and 9.3%, respectively, since October 31.