March 21, 2024

Analysing record highs of P66 and Marathon Petroleum with Kpler’s Refineries Intelligence tool

The energy sector has witnessed remarkable performances from major refiners like Phillips 66 (P66), Valero Energy, and Marathon Petroleum, as they hit record highs, fueled by robust refining margins and strategic operational enhancements. Kpler’s new refineries intelligence tool can unlock real-time insights into these companies’ operations to fuel customer trading and investment strategies. Let's delve into the reasons behind their success using Kpler data. 

Phillips 66: a blend of strategy and performance

Phillips 66 surpassed Q4 2023 quarterly profit estimates, with its shares reaching an all-time high. This surge was propelled by strong refining margins and notable gains from its midstream unit. A significant leap in the company's market capture—from 66% to 107% in just one quarter—underscores its enhanced refining profitability, a turnaround attributed to operational efficiencies and strategic management, especially amid pressures from activist investors.

P66 stated that for the first quarter, its eight wholly-owned and two joint-venture refineries' crude oil utilization would be in the low 90%-range of their combined capacity of 1.9 million barrels per day.

With Kpler’s Refineries Intelligence product, customers can see this for themselves before earnings. As we can see in the screenshot below, Kpler accurately captures the utilization rate of P66’s combined refinery operations at 90% for January 2024. Additionally, we can observe that this trendline is heading down so far for the month of March. Kpler’s refinery intelligence product tracks data at a refinery level and is updated daily, so customers are able to truly gain an advantage in the market.

The first quarter of 2024 is also forecast for heavy maintenance in the U.S. from refiners following two years of high levels of operations. With Kpler’s refineries intelligence product, customers are able to get real-time updates on planned and unplanned maintenance from an exclusive partnership with IIR, the leader in refinery maintenance data. As can be seen in the screenshot below, Kpler provides information on each P66 refinery as it relates to complexity, NCI, maintenance and more to provide customers with transparency into commercial refinery operations. This data also fuels the model and is a dynamic element of Kpler’s linear programming model. 

The company's midstream earnings saw an impressive rise, thanks to increased natural gas liquids volumes and record liquefied petroleum gas exports. Additionally, Phillips 66's chemical segment doubled its earnings. Kpler also offers data on imports and exports across petroleum products with market leading accuracy. In the screenshot below from Kpler’s data, we can observe all of P66’s terminals and look into specifically what products were exported and precisely where they went - whether to Europe, China, or South America.

Despite a dip in realized margins due to falling fuel prices, strategic inventory hedging and strong commercial sales helped offset potential losses. With Kpler’s data, customers can even look into real-time crude oil inventories at P66 refineries to assess how supply is shifting and P66 are managing inventory to get ahead of the market. In the screenshot below we can observe P66’s Sweeney refinery and the inventory levels there for each floating roof tank.

Looking ahead, Phillips 66 is pivoting towards sustainable energy, with significant investments in a renewable diesel plant, a commodity that Kpler tracks as well, signaling a strategic transformation in its operational focus.

Marathon Petroleum: capitalizing on market dynamics

Marathon Petroleum's strategy to beat Q4 2023 Wall Street expectations was rooted in exploiting tight supplies and high demand, which led to soaring margins. This demand continues with gasoline prices on the rise and slowing global oil production. The company's proactive approach to stock repurchases, alongside an impressive 109% margin capture rate, reflects a keen understanding of market dynamics and an ability to capitalize on them efficiently.

High utilization rates and strategic throughput management, despite expected downturns due to maintenance, demonstrate Marathon's operational excellence. With Kpler’s refineries intelligence tool, customers are able to look into both utilization rates and crude oil inventories as shown above, but they can also even dive into the gross margins per refinery, in dollars per barrel. In the screenshot below, we can observe gross margins for Marathon’s overall refining operations, but also can gain data on individual refineries to understand how the average is composed.

The company's adjustment to market strategies has been pivotal in maximizing fuel production and refining margins, indicating a dynamic and responsive business model.

The broader context

The record highs of these companies come at a time when the energy sector faces scrutiny over investment priorities, particularly regarding refining capacity and shareholder returns. The success of P66 and Marathon, is not just a testament to their individual strategies but also reflects broader industry trends and challenges, including geopolitical influences, supply-demand dynamics, and the transition towards more sustainable energy solutions. Navigating the complex interplay of these factors requires accurate, real-time data that only Kpler can provide. 

In conclusion, the triumphant performances of Phillips 66 and Marathon Petroleum in hitting record highs are a narrative of strategic adaptation, operational efficiency, and a keen sense of market dynamics. How this trend among players such as P66 and Marathon continues will continue to intrigue investors and producers alike as energy prices continue to rise across the world.

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All of the data and insight from this article came from the Kpler platform. Enabling commodity traders, producers and investors to reduce risk and maximise returns, to make better decisions, faster with real-time, unbiased expert research, AI driven analytics, and precise price forecasting.

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