4 February 2026 | 8:19PM SGT Equity Research Energy Symposium Week: Takeaways from call with experts (JLC) on Chinese oil product exports On 4 February, we hosted a call with China oil experts from JLC, as part of our Energy Symposium Week: Expert Forum. The session focused on the China refining market outlook and Chinese oil product export trends. Key takeaways from the call were around sustainability of China's tight export control despite increasing surplus in the domestic market. Contained exports from ...

Vi e w p o i n t | Refining margins remain elevated compared to late 2025 but they should compress further because of (1) potential oil supply disruptions or purchase diversion away from Russian oil, (2) higher y/y refinery capacity growth and capacity availability, such as possibly more robust Russian refinery operation despite hits by Ukraine, and (3) looser fundamentals of gasoline relative to middle distillates. Surging gasoline inventories are pressuring gasoline crack spreads, but gasoil and jet fuel ...

Key Takeaways Phillips 66 posted Q4 adjusted EPS of $2.47, beating estimates and reversing a year-ago quarterly loss.PSX refining swung to profit as worldwide realized margins nearly doubled from last year's levels.Phillips 66 saw higher midstream earnings and cash flow, while chemicals and renewables weighed on results.Phillips 66 (PSX) reported fourth-quarter 2025 adjusted earnings of $2.47 per share, which beat the Zacks Consensus Estimate of $2.11. The bottom line also improved from the year-ago quarter ...

Core Viewpoint - Marathon Petroleum exceeded Wall Street's profit expectations for the fourth quarter, driven by robust refining margins [1] Group 1: Financial Performance - The company reported a significant increase in profits, attributed to strong refining margins [1] - The fourth-quarter results surpassed analysts' forecasts, indicating a positive trend in financial performance [1] Group 2: Industry Context - The refining sector is experiencing favorable conditions, contributing to improved margins for companies like Marathon Petroleum [1] - Strong demand for refined products has bolstered the overall profitability of the refining industry [1]

Stronger refining margins and higher throughput volumes helped U.S. refining giant Valero Energy Corporation (NYSE: VLO) beat analyst estimates of fourth-quarter earnings. Valero on Thursday kicked off the earnings season for the U.S. refiners by reporting an adjusted net income attributable to Valero stockholders of $1.2 billion, or $3.82 per share, for the fourth quarter. This easily beat the analyst consensus estimate of $3.27 earnings per share in The Wall Street Journal. Strong refining margins bo ...

Core Insights - Valero Energy Corporation (VLO) has outperformed Phillips 66 (PSX) over the past year, with a stock price increase of 32.7% compared to PSX's 15.9% gain [1] - Both companies are positioned to benefit from the current softness in crude oil prices, which is expected to enhance refining margins [4][6] Group 1: Valero Energy Corporation (VLO) - VLO's operational flexibility allows its refineries to adjust product yields based on market conditions, providing a strategic advantage [4] - The current market environment is expected to support strong refining margins, aiding VLO's profitability despite the cyclical nature of the refining industry [5] - VLO is more sensitive to refining margins and can benefit when crude prices are weak, making it attractive to investors who are comfortable with higher volatility [13] Group 2: Phillips 66 (PSX) - PSX's diversified business model across midstream, chemicals, and renewables provides greater stability and lower volatility in cash flows [6][7] - The company is focusing on streamlining its asset base through targeted divestitures and strategic acquisitions, such as the EPIC NGL acquisition, to enhance long-term earnings visibility [8] - PSX trades at a higher EV/EBITDA of 14.44X compared to VLO's 8.83X, indicating investor preference for its diversified model [12]

Core Viewpoint - Valero Energy Corporation (VLO) is expected to report a significant increase in fourth-quarter earnings, with a consensus estimate of $3.19 per share, reflecting a 398.4% year-over-year improvement, despite a projected revenue decline of 6% to $28.9 billion [2][5]. Earnings Performance - VLO has consistently exceeded earnings estimates in the past four quarters, with an average surprise of 138.8% [3]. - The company has experienced four upward and two downward revisions in earnings estimates over the last 30 days [2]. Earnings Estimates and Trends - The current earnings estimate of $3.19 per share shows a positive trend compared to previous estimates, with a 3.57% increase over the last 30 days [3]. - The Earnings ESP (Expected Surprise Prediction) stands at -2.90%, indicating a lower likelihood of an earnings beat this quarter [4]. Market and Operational Factors - Valero is anticipated to benefit from strong refining margins due to lower crude prices, which averaged $59.64 per barrel compared to $70.74 in the prior-year quarter, thus reducing feedstock costs [5][6]. - However, the company faces challenges in the Renewable Diesel segment and increased depreciation and amortization expenses related to the closure of the Benecia Refinery, which may negatively impact earnings [7]. Stock Performance and Valuation - VLO's stock has increased by 32.4% over the past year, outperforming the industry average of 16% [8]. - The company is currently considered overvalued, with a trailing 12-month EV/EBITDA ratio of 9.02X, significantly higher than the industry average of 4.66X [9]. Company Overview - Valero Energy operates 15 refineries with a combined throughput capacity of 3.2 million barrels per day, providing operational flexibility to process various feedstocks [11]. - The company maintains a strong financial position with a low debt-to-capitalization ratio of 18% as of September 30, 2025, and utilizes excess free cash flow for share buybacks [13]. Industry Context - The refining industry is cyclical and volatile, with margins dependent on crude oil prices and demand for refined products, which can fluctuate significantly [13]. - Other refining companies like Phillips 66 and Par Pacific Holdings are also expected to benefit from favorable refining margins due to tightened supply and resilient demand for refined fuels [16].

Core Insights - Phillips 66 (PSX) is a diversified energy company with operations in refining, midstream, chemicals, renewable fuels, and marketing, experiencing significant gains in its refining segment due to strong refining margins in 2025 [1][7] - The company’s refining business is expected to benefit further in Q4 2025 from widening light-heavy crude spreads and increased Canadian crude production [1][2] Refining Segment Performance - PSX operates a complex refinery network capable of processing various feedstocks, including heavy sour crude like Western Canadian Select (WCS), which is anticipated to become cheaper in upcoming quarters [2][7] - Additional WCS production and winter diluent blending are expected to enhance Canadian production in Q4 2025 and Q1 2026, leading to a decline in heavy crude prices, which will benefit PSX's refining operations [2][3] Market Dynamics - The potential reopening of Venezuelan oil and gas reserves for U.S. refiners may introduce Venezuelan heavy sour crude to the market, further exerting downward pressure on heavy crude prices, thus supporting strong refining margins for PSX [3] Competitor Overview - Valero Energy Corporation (VLO) operates 15 refineries with a combined throughput capacity of 3.2 million barrels per day, allowing it to serve diverse markets [4] - Par Pacific Holdings (PARR) has a refining capacity of 219,000 barrels per day and operates in Hawaii and the Pacific Northwest, along with a logistics segment [5] Financial Performance - PSX shares have increased by 19.7% over the past year, outperforming the industry composite stocks, which rose by 12.7% [6] - The company’s current enterprise-value-to-EBITDA (EV/EBITDA) ratio stands at 14.32X, significantly above the industry average of 4.47X [9] Earnings Estimates - The Zacks Consensus Estimate for PSX's 2025 earnings has seen downward revisions recently, with current estimates at $6.16 for the year and $11.98 for 2026 [10][11]

Core Viewpoint - Valero Energy's shares declined over 2% after Mizuho downgraded the company from Outperform to Neutral, setting a new price target of $192, citing concerns over valuation and refining margins [1][3] Company Summary - Mizuho highlighted Valero's above-peer valuation and the potential for weaker refining margins as primary reasons for the downgrade [1] - Despite the downgrade, Mizuho maintained a positive outlook on Valero's execution, integrated refining assets, and disciplined capital return strategy [1] - The refining outlook for 2026 appears less favorable, impacting Valero's stock performance [1][2] Industry Summary - Several global refining projects expected to launch by 2025 have been delayed to the first half of 2026, which may affect supply-demand dynamics and pressure refining margins [2] - Valero has shown strong year-to-date performance among large-cap refiners, but its significant exposure to the refining cycle could make it vulnerable to a softer macroeconomic environment [2]

Core Viewpoint - US oil stocks are regaining momentum due to resilient refining margins and shareholder-friendly capital allocation, with specific companies identified as having potential for upside in the coming months [1] Group 1: Industry Insights - The oil industry is experiencing a recovery phase, driven by strong refining margins which support profitability [1] - Capital allocation strategies that favor shareholders are becoming more prevalent, indicating a shift towards enhancing shareholder value [1] Group 2: Company Opportunities - Two specific companies within the oil sector are highlighted as particularly well-positioned for growth in the near future, suggesting targeted investment opportunities [1]