U.S. Refiners Finally Profit from Renewable Fuels Amid Demand Surge
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 15 2026
0mins
Source: Newsfilter
- Profit Recovery: U.S. refiners are experiencing a significant rebound in profitability from renewable fuels, with Valero's renewable diesel segment swinging to a $139 million profit in Q1 from a $141 million loss a year earlier, indicating a market recovery driven by policy support.
- Policy Drivers: The U.S. EPA's mandate for refiners to increase biofuel blending by 60% over the next two years not only boosts demand for biodiesel and renewable diesel but also provides refiners with stable market expectations, aiding their profitability recovery.
- Market Dynamics: As demand for biofuels rises, the price of RIN credits has surged over 80% to above $2 each, providing refiners with an additional revenue stream that further enhances their financial performance amid tight diesel supplies.
- Future Uncertainty: Despite strong demand, there are uncertainties regarding whether refiners will commit to expanding production capacity, especially as diesel prices have surged 46% due to the Iran war, making conventional diesel production more attractive than renewable diesel expansion.
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Analyst Views on PSX
Wall Street analysts forecast PSX stock price to fall
15 Analyst Rating
8 Buy
7 Hold
0 Sell
Moderate Buy
Current: 176.710
Low
110.00
Averages
132.40
High
162.00
Current: 176.710
Low
110.00
Averages
132.40
High
162.00
About PSX
Phillips 66 is a diversified and integrated downstream energy provider that manufactures, transports and markets products. The Company's Midstream segment provides crude oil and refined petroleum product transportation, terminating and processing services, as well as natural gas and natural gas liquids (NGL) transportation, storage, fractionation, gathering, processing and marketing services. Its Chemicals segment consists of its 50% equity investment in Chevron Phillips Chemical Company LLC, which manufactures and markets petrochemicals and plastics on a worldwide basis. Its Refining segment refines crude oil and other feedstocks into petroleum products, such as gasoline, distillates, including aviation fuels. Its Marketing and Specialties segment purchases for resale and markets refined products, mainly in the United States and Europe. Its Renewable Fuels segment processes renewable feedstocks into renewable products at the Rodeo Renewable Energy Complex and at its Humber Refinery.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Mizuho Upgrades Phillips 66 Amid Oil Market Turmoil
- Phillips 66 Upgrade: Mizuho upgraded Phillips 66 from Neutral to Outperform with a price target raised from $170 to $212, anticipating higher upside due to strong strategic execution and improving refining operations, which positions the company favorably in the refining and chemicals margins landscape.
- HF Sinclair Downgrade: HF Sinclair was downgraded to Neutral despite a price target increase from $67 to $79, as the analyst sees reduced momentum in refining reliability and costs, compounded by management changes that introduce uncertainty regarding the company's strategic direction.
- Gulfport Energy Outlook: Gulfport Energy's rating was upgraded to Outperform with a price target of $252, as the analyst expects incoming CEO Nick Dell'Osso to enhance the stock's profile in relation to secular trends in the natural gas markets, potentially driving significant stock appreciation.
- Kosmos Energy Risks: Kosmos Energy was downgraded to Underperform with a price target of $3, with analysts highlighting considerable execution risks ahead in meeting production growth and cost reduction targets, which could hinder the company's performance in the near term.
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Trump's Waiver on Shipping Law Fails to Lower Gas Prices
- High Gas Prices Persist: According to AAA data, the national average gasoline price has reached $4.49 per gallon, significantly rising since the onset of the U.S.-Israeli war, indicating that Trump's policy has failed to effectively control inflationary pressures on fuel prices.
- Limited Transport Volumes: Under the waived shipping law, refiners utilized the exemption only about 50 times in the first two months, moving 2.6 million barrels of crude and 7.5 million barrels of gasoline, diesel, and jet fuel, which represents a minuscule fraction of daily U.S. consumption.
- High Shipping Costs: Due to many international tankers being trapped in the Strait of Hormuz, freight rates for foreign-flagged vessels are significantly higher than normal, leading to increased transportation costs and exacerbating inefficiencies in domestic shipping.
- Market Structure Changes: The waiver may lead U.S. tankers to pursue international routes, increasing domestic tanker market tightness, while tax uncertainties deter companies from chartering foreign tankers for U.S. routes, further impacting the domestic supply chain.
See More
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- Dollar General Downgrade: Deutsche Bank downgraded Dollar General from buy to hold, citing challenges in its customer base and the widening gap in the K-shaped economy, which may limit same-store sales upside, reflecting a cautious outlook on the company.
- Ecolab Upgrade: UBS upgraded Ecolab from neutral to buy and raised its price target to $325, demonstrating strong demand and positive performance expectations for the chemicals company amid a favorable market environment.
- FedEx Upgrade: JPMorgan upgraded FedEx from neutral to overweight, expressing optimism ahead of its upcoming earnings report, particularly regarding the separation of its freight business, which is seen as an attractive risk-reward opportunity.
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US Stocks Close Higher: S&P 500 Hits All-Time High
- Market Performance: The S&P 500 rose by 0.61% and the Nasdaq 100 increased by 1.76%, reaching all-time highs, indicating strong demand for tech stocks amid falling oil prices and progress in US-Iran peace talks.
- Oil Price Volatility: WTI crude oil prices fell to a 2.5-week low as US-Iran negotiations aimed at reopening the Strait of Hormuz progressed, although military actions by US Central Command pressured market sentiment, leading to declines in energy stocks.
- Economic Data Impact: The Chicago Fed National Activity Index rose to a 13-month high of 0.14, surpassing expectations, while a slight decline in the consumer confidence index reflects the complexities of economic recovery, potentially influencing future market trends.
- Earnings Reports: As of Tuesday, 83% of the 475 S&P 500 companies reported earnings above expectations, with Q1 earnings projected to grow by 12% year-on-year, although excluding the tech sector, the increase is only 3%, highlighting disparities across industries.
See More
U.S. Refiners Show Significant Earnings Improvement in Q1 2026
- Valero Energy Recovery: Valero Energy reported earnings of $4.22 per share in Q1 2026, a significant turnaround from a loss of $1.90 per share in Q1 2025, and after excluding one-time items, the profit stands at $0.89, showcasing the company's resilience in a complex market environment.
- Marathon Petroleum Profit Growth: Marathon Petroleum achieved earnings of $1.73 per share in Q1 2026, which adjusted to $1.65 after removing one-time items, significantly higher than the $0.24 loss per share reported in the same quarter of 2025, reflecting an improvement in the company's refining profitability.
- Phillips 66 Adjusted Earnings: Phillips 66's adjusted earnings for Q1 2026 were $0.49 per share, a notable improvement from a loss of $0.90 per share in Q1 2025, yet a substantial decline from $2.47 in Q4 2025, indicating the impact of seasonal fluctuations on performance.
- Geopolitical Risk Impact: The ongoing geopolitical conflict in the Middle East led Phillips 66 to report an $839 million mark-to-market loss from hedging activities in Q1, highlighting the adverse effects of high oil prices on refining operations, prompting investors to carefully assess the risks of short-term investment strategies.
See More
U.S. Refiners' Q1 Earnings Review Amid Geopolitical Tensions
- Strong Earnings Recovery: Valero Energy reported Q1 earnings of $4.22 per share, a significant turnaround from a loss of $1.90 per share in Q1 2025, and after excluding one-time items, the profit stands at $0.89, showcasing the company's robust performance in a recovering market and boosting investor confidence.
- Marathon Petroleum's Resurgence: Marathon Petroleum's Q1 earnings reached $1.73 per share, with a post-adjustment figure of $1.65, significantly higher than the $0.24 loss reported in Q1 2025, indicating a recovery in profitability despite a decline from the previous quarter's $4.07, reflecting the volatility in refining margins.
- Phillips 66's Challenges: Phillips 66 reported adjusted earnings of $0.49 per share in Q1, a notable improvement from a $0.90 loss in the same quarter of 2025, yet it fell sharply from $2.47 in the previous quarter, highlighting the pressure on profitability amid rising energy costs.
- Geopolitical Impact: The ongoing geopolitical conflict in the Middle East has driven oil prices higher, with Phillips 66 reporting an $839 million mark-to-market loss from hedging activities in Q1, indicating the adverse effects of elevated energy costs on the refining sector and increasing uncertainty for the summer driving season.
See More
Mizuho Upgrades Phillips 66 Amid Oil Market Turmoil
- Phillips 66 Upgrade: Mizuho upgraded Phillips 66 from Neutral to Outperform with a price target raised from $170 to $212, anticipating higher upside due to strong strategic execution and improving refining operations, which positions the company favorably in the refining and chemicals margins landscape.
- HF Sinclair Downgrade: HF Sinclair was downgraded to Neutral despite a price target increase from $67 to $79, as the analyst sees reduced momentum in refining reliability and costs, compounded by management changes that introduce uncertainty regarding the company's strategic direction.
- Gulfport Energy Outlook: Gulfport Energy's rating was upgraded to Outperform with a price target of $252, as the analyst expects incoming CEO Nick Dell'Osso to enhance the stock's profile in relation to secular trends in the natural gas markets, potentially driving significant stock appreciation.
- Kosmos Energy Risks: Kosmos Energy was downgraded to Underperform with a price target of $3, with analysts highlighting considerable execution risks ahead in meeting production growth and cost reduction targets, which could hinder the company's performance in the near term.
See More
Trump's Waiver on Shipping Law Fails to Lower Gas Prices
- High Gas Prices Persist: According to AAA data, the national average gasoline price has reached $4.49 per gallon, significantly rising since the onset of the U.S.-Israeli war, indicating that Trump's policy has failed to effectively control inflationary pressures on fuel prices.
- Limited Transport Volumes: Under the waived shipping law, refiners utilized the exemption only about 50 times in the first two months, moving 2.6 million barrels of crude and 7.5 million barrels of gasoline, diesel, and jet fuel, which represents a minuscule fraction of daily U.S. consumption.
- High Shipping Costs: Due to many international tankers being trapped in the Strait of Hormuz, freight rates for foreign-flagged vessels are significantly higher than normal, leading to increased transportation costs and exacerbating inefficiencies in domestic shipping.
- Market Structure Changes: The waiver may lead U.S. tankers to pursue international routes, increasing domestic tanker market tightness, while tax uncertainties deter companies from chartering foreign tankers for U.S. routes, further impacting the domestic supply chain.
See More
Wall Street's Latest Rating Changes Overview
- Openlane Upgrade: JPMorgan upgraded Openlane from neutral to overweight and raised its December 2026 price target to $38, indicating that the online used car marketplace is experiencing robust growth and has potential for sustainable expansion over the coming years.
- Dollar General Downgrade: Deutsche Bank downgraded Dollar General from buy to hold, citing challenges in its customer base and the widening gap in the K-shaped economy, which may limit same-store sales upside, reflecting a cautious outlook on the company.
- Ecolab Upgrade: UBS upgraded Ecolab from neutral to buy and raised its price target to $325, demonstrating strong demand and positive performance expectations for the chemicals company amid a favorable market environment.
- FedEx Upgrade: JPMorgan upgraded FedEx from neutral to overweight, expressing optimism ahead of its upcoming earnings report, particularly regarding the separation of its freight business, which is seen as an attractive risk-reward opportunity.
See More
US Stocks Close Higher: S&P 500 Hits All-Time High
- Market Performance: The S&P 500 rose by 0.61% and the Nasdaq 100 increased by 1.76%, reaching all-time highs, indicating strong demand for tech stocks amid falling oil prices and progress in US-Iran peace talks.
- Oil Price Volatility: WTI crude oil prices fell to a 2.5-week low as US-Iran negotiations aimed at reopening the Strait of Hormuz progressed, although military actions by US Central Command pressured market sentiment, leading to declines in energy stocks.
- Economic Data Impact: The Chicago Fed National Activity Index rose to a 13-month high of 0.14, surpassing expectations, while a slight decline in the consumer confidence index reflects the complexities of economic recovery, potentially influencing future market trends.
- Earnings Reports: As of Tuesday, 83% of the 475 S&P 500 companies reported earnings above expectations, with Q1 earnings projected to grow by 12% year-on-year, although excluding the tech sector, the increase is only 3%, highlighting disparities across industries.
See More
U.S. Refiners Show Significant Earnings Improvement in Q1 2026
- Valero Energy Recovery: Valero Energy reported earnings of $4.22 per share in Q1 2026, a significant turnaround from a loss of $1.90 per share in Q1 2025, and after excluding one-time items, the profit stands at $0.89, showcasing the company's resilience in a complex market environment.
- Marathon Petroleum Profit Growth: Marathon Petroleum achieved earnings of $1.73 per share in Q1 2026, which adjusted to $1.65 after removing one-time items, significantly higher than the $0.24 loss per share reported in the same quarter of 2025, reflecting an improvement in the company's refining profitability.
- Phillips 66 Adjusted Earnings: Phillips 66's adjusted earnings for Q1 2026 were $0.49 per share, a notable improvement from a loss of $0.90 per share in Q1 2025, yet a substantial decline from $2.47 in Q4 2025, indicating the impact of seasonal fluctuations on performance.
- Geopolitical Risk Impact: The ongoing geopolitical conflict in the Middle East led Phillips 66 to report an $839 million mark-to-market loss from hedging activities in Q1, highlighting the adverse effects of high oil prices on refining operations, prompting investors to carefully assess the risks of short-term investment strategies.
See More
U.S. Refiners' Q1 Earnings Review Amid Geopolitical Tensions
- Strong Earnings Recovery: Valero Energy reported Q1 earnings of $4.22 per share, a significant turnaround from a loss of $1.90 per share in Q1 2025, and after excluding one-time items, the profit stands at $0.89, showcasing the company's robust performance in a recovering market and boosting investor confidence.
- Marathon Petroleum's Resurgence: Marathon Petroleum's Q1 earnings reached $1.73 per share, with a post-adjustment figure of $1.65, significantly higher than the $0.24 loss reported in Q1 2025, indicating a recovery in profitability despite a decline from the previous quarter's $4.07, reflecting the volatility in refining margins.
- Phillips 66's Challenges: Phillips 66 reported adjusted earnings of $0.49 per share in Q1, a notable improvement from a $0.90 loss in the same quarter of 2025, yet it fell sharply from $2.47 in the previous quarter, highlighting the pressure on profitability amid rising energy costs.
- Geopolitical Impact: The ongoing geopolitical conflict in the Middle East has driven oil prices higher, with Phillips 66 reporting an $839 million mark-to-market loss from hedging activities in Q1, indicating the adverse effects of elevated energy costs on the refining sector and increasing uncertainty for the summer driving season.
See More
