Phillips 66 Plummets 2.35% Amid Sector Turbulence: What’s Fueling the Selloff?

Summary
• Phillips 66 (PSX) plunges 2.35% intraday to $136.69, breaking below its 200-day moving average of $125.16
• Freedom Capital Markets downgrades PSX to Sell, citing oversupplied oil markets and weak refining margins
• Venezuela crude access and midstream expansion plans spark mixed investor sentiment
• Technicals show RSI at 47.4, MACD bearish crossover, and Bollinger Bands squeezing toward $122.11 support

Phillips 66’s sharp intraday decline has ignited a firestorm of speculation, with analysts scrambling to untangle the interplay of sector-wide headwinds and company-specific catalysts. The stock’s 2.35% drop—its worst performance since late 2024—coincides with a bearish technical setup and a downgrade from Freedom Capital Markets. With crude prices projected to remain soft and Venezuela’s oil return looming, the refining sector faces a critical inflection point.

Downgrade and Venezuela Uncertainty Spark Selloff
The selloff stems from a dual blow: a bearish analyst downgrade and geopolitical uncertainty. Freedom Capital Markets slashed PSX to Sell, warning that the recent 26.1% annual rally has outpaced fundamentals, with falling oil prices and oversupply pressuring refining margins. Compounding this, Reuters reported that U.S. operations in Venezuela—where Phillips 66 can process 100,000 barrels/day of heavy crude—remain politically volatile. While Venezuela’s heavy sour crude is ideal for diesel production, its low margins and regulatory risks have spooked investors. The downgrade and Venezuela-related jitters have triggered profit-taking, especially as PSX trades at a 14.41x EV/EBITDA—well above peers like Valero Energy (VLO) at 7.90x.

Refining Sector Mixed as Valero Holds Steady
The refining sector remains fragmented, with Valero Energy (VLO) down 0.99% despite PSX’s sharper decline. While both benefit from $51.42 WTI crude forecasts for 2026, PSX’s midstream-heavy strategy and higher valuation multiple have made it a more volatile play. Par Pacific Holdings (PARR) at 4.45x EV/EBITDA and VLO’s 7.90x suggest PSX’s 14.41x is unsustainable in a soft crude environment. The sector’s mixed performance underscores divergent investor views on refining margins and midstream stability.

Bearish Options and ETFs to Watch in Volatile Refining Sector
• 200-day average: $125.16 (below current price)
• RSI: 47.4 (neutral to bearish)
• MACD: -1.31 (bearish crossover)
• Bollinger Bands: $122.11 (lower band) to $146.12 (upper band)
• Support/Resistance: 30D support at $129.03, 200D resistance at $129.55

Phillips 66’s technicals signal a critical juncture. The RSI hovering near 47.4 and MACD bearish crossover suggest momentum is shifting. With Bollinger Bands narrowing toward $122.11, a breakdown below $129.03 could trigger a test of key support. Two options stand out for bearish exposure:

• PSX20260116P130 (Put, $130 strike, 2026-01-16 expiry):
- IV: 31.65% (moderate)
- Leverage: 201.29%
- Delta: -0.1659 (moderate sensitivity)
- Theta: -0.0658 (modest time decay)
- Gamma: 0.0331 (high sensitivity to price swings)
- Turnover: 2,638 (liquid)
This put option offers asymmetric upside in a 5% downside scenario. At $136.69, a 5% drop to $129.36 would yield a $0.36 payoff (max(0, 130 - 129.36)). Its high gamma and moderate delta make it ideal for a short-term bearish bet.

• PSX20260116C130 (Call, $130 strike, 2026-01-16 expiry):
- IV: 35.21% (moderate)
- Leverage: 17.55%
- Delta: 0.8091 (high sensitivity)
- Theta: -0.1553 (aggressive time decay)
- Gamma: 0.0324 (high sensitivity)
- Turnover: 74,506 (extremely liquid)
This call option is a high-risk/high-reward play. While its delta suggests strong directional exposure, the 23.53% price change ratio and high theta make it suitable only for aggressive bulls expecting a rebound above $130. A 5% upside to $143.52 would yield $13.52 payoff (max(0, 143.52 - 130)).

Hook: If $129.03 breaks, PSX20260116P130 offers bearish leverage. Aggressive bulls may chase PSX20260116C130 into a bounce above $130.

Backtest Phillips 66 Stock Performance
The backtest of the Philippine Stock Exchange (PSX) after an intraday plunge of at least -2% from 2022 to the present shows favorable short-to-medium-term performance. The 3-Day win rate is 53.45%, the 10-Day win rate is 56.03%, and the 30-Day win rate is 60.13%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 5.17%, which occurred on day 59, suggesting that while there is some volatility, there is also potential for recovery and positive movement in the market.

Act Now: PSX at Pivotal Crossroads
Phillips 66’s 2.35% intraday drop has exposed the fragility of its premium valuation in a soft crude environment. With Venezuela’s heavy crude access and midstream expansion offering long-term potential, the stock’s near-term outlook hinges on its ability to defend $129.03 support. Investors should monitor Valero Energy’s (VLO) -0.99% performance as a sector barometer and watch for a breakdown below $122.11. The upcoming February 4 earnings report will be critical—Frederick Capital’s $138 price target suggests a potential rebound, but only if refining margins stabilize. Action: Short-term traders should prioritize PSX20260116P130 for bearish exposure, while long-term investors may consider adding dips below $125.16.