February 3, 2025 [Reuters]- Phillips 66 fourth-quarter profit plummeted to $8 million from $1.26 billion last year, hurt by tumbling refining margins, sending shares of the U.S. refiner down 3.2% in morning trade.

With new refining capacity coming online and refined product demand faltering in the United States and China, the two largest oil consumers, energy companies worldwide have taken an earnings hit.

Weak margins also pushed U.S. oil major Chevron’s refining business into a quarterly loss for the first time since 2020.

Phillips said quarterly realized refining margin tumbled 56% to $6.08 per barrel, from a year earlier, while quarterly crude capacity utilization stood at 94%, compared with 92% from a year earlier.

The company’s refining unit posted a loss of $775 million in the quarter, compared with a profit of $859 million last year.

Phillips 66 now expects heavy maintenance at its refineries in the current quarter with utilization forecast to be in the low 80%, compared with 92% utilization a year ago. The turnaround expenses are expected to be between $290 million and $310 million for the quarter ending March 31, more than double the $124 million from a year earlier.

The Houston, Texas-based company’s renewable fuels segment provided some cushioning, helping it post better-than-feared quarterly results.

The renewable fuels segment, which produces sustainable aviation fuel among others, reported a quarterly profit of $28 million, compared to a loss of $11 million a year earlier, driven by higher margins at its Rodeo Complex in San Francisco and strength in international markets.

On an adjusted basis, the company reported a loss of 15 cents per share in the quarter, compared with the analysts’ average estimate of 23 cents loss per share, according to data compiled by LSEG.