Phillips 66 (NYSE: PSX) reported a loss for the fourth quarter, as expected, but this loss was smaller than analysts had forecast as the refiner’s renewable fuels division booked a profit in the last quarter of 2024.

Phillips 66 booked an adjusted loss of $61 million, or a loss of $0.15 per share, for the fourth quarter, compared to earnings of $859 million for the third quarter.

The Q4 loss of $0.15 per share was smaller than the $0.23 per-share loss expected by an average analyst estimate compiled by LSEG.

Refining margins continued to decline throughout the fourth quarter, and Phillips 66’s realized refining margins per barrel fell further to $6.08 in the fourth quarter, down from $8.31 in the previous quarter. The margin more than halved from $13.88 per barrel for the fourth quarter of 2023.

As a result, the refining division deepened the adjusted loss to $759 million from a loss of $67 million in the third quarter.

But the renewable fuels segment turned an adjusted profit of $28 million in Q4, compared to a loss of $116 million for the previous quarter.

Despite the losses, Phillips 66 announced today the next phase of priorities through 2027, which include delivering shareholder returns by returning more than 50% of operating cash flow to shareholders.

Earlier this week, another refining giant, Valero Energy, reported higher-than-expected earnings for the fourth quarter despite a widely anticipated slump in profits for the last quarter of 2024 and the full year.

Following record refining margins and booming profits in 2022 and early 2023, the U.S. and global fuel markets started to normalize in the latter half of 2023 and refining margins began to ease from the record highs seen in the immediate aftermath of the Russian invasion of Ukraine.

Refining margins for U.S. refiners slumped to multi-year lows amid tepid fuel demand and increased global fuel supply.

The refining industry is witnessing the end of the supercycle of huge profits and record margins that began with the post-pandemic surge in demand and the war- and sanctions-related supply disruptions.

By Tom Kool for Oilprice.com

More Top Reads From Oilprice.com

• Ukraine Launches Major Drone Assault on Russian Oil Infrastructure
• Trade Dispute Could Force U.S. to Buy Venezuelan Oil, Canada Says
• Red Sea Risks Remain High Despite Gaza Truce and Houthi Ceasefire