Why Phillips 66 (PSX) is a Top Momentum Stock for the Long-Term

Phillips 66 shares rose 1.1% to $176.42 in the last session, extending gains as crude oil slid below $70 a barrel. The move tracks a broader energy sector lift. The driver is the same: lower feedstock costs are widening refining margins for companies like Phillips 66.

The crack spread – the difference between crude input costs and the price of gasoline and diesel – expands when crude falls faster than refined products. That dynamic has played out over recent weeks. West Texas Intermediate crude has stayed below $70 while gasoline prices have held relatively steady. For a refiner operating 12 plants across the U.S. and Europe, each penny of margin expansion flows into quarterly earnings at scale.

Zacks analysts have identified Phillips 66 and Par Pacific as two refiners positioned to benefit from sub-$70 oil. The thesis is straightforward: lower feedstock costs improve profitability without requiring demand growth. The Zacks Picks Phillips 66, Par Pacific on Sub-$70 Oil Play article outlines the reasoning in more detail.

Phillips 66's refining margins have already shown improvement in recent quarters. The company reported higher realized margins in its latest quarterly update, though it has not yet released Q2 results. The Phillips 66 Refining Margins Benefit from Lower Crude Costs article details how the cost environment has shifted in the refiner's favor.

The risk in the setup is the mirror image. A crude rally above $75 would compress crack spreads and erase the margin advantage. That makes oil's path the single biggest variable for PSX shareholders. The stock's near-term returns are effectively a call on whether crude stays below $70 or snaps back.

A policy risk adds another layer. The Trump administration has floated the idea of an oil-gouging investigation. Export restrictions or price controls would disrupt supply chains and cap refining margins. The market has largely shrugged off the threat so far. Some traders are tracking the policy calendar alongside weekly inventory data, according to a separate report on the oil-gouging threat.

The commodity complex has responded to the lower crude environment in uneven ways. Gold and other metals have rallied as the dollar slipped. Within energy, the refining sector has been the standout. The commodities analysis page tracks the cross-asset moves and the refining margin story.

Phillips 66 carries an Alpha Score of 61 out of 100, a Moderate label that reflects a balanced risk-reward profile. The stock sits in the Energy sector, where the dominant theme this quarter has been the margin expansion from lower crude costs. The Score suggests the risk of a sharp reversal is roughly offset by the upside if crude stays low.

The momentum case for PSX rests on the persistence of the margin expansion. If crude remains below $70 through the summer driving season, demand for gasoline typically supports crack spreads. The stock's relative strength has improved against the S&P 500, a technical signal that confirms the fundamental driver.

The next test comes with the July refining margin reports and the Q2 earnings release. If crack spreads hold at current levels, the earnings beat that the Zacks thesis implies becomes more probable. If crude rallies, the margin compression will show up in the numbers before any analyst downgrades the stock. The weekly EIA inventory report will provide intermediate checkpoints on the path of product prices.

The setup is clean: sub-$70 crude, widening margins, and a refiner with the scale to capture the spread. The risk is the reversal, and that is a call on oil, not on Phillips 66 itself.