Phillips 66 Slides Below $125 as Analysts Reassess Refining Outlook

• PSX falls 2.28% to $125.34, closing below key $128 resistance level
• Citigroup downgrades to Neutral despite $130 price target increase
• Q1 adjusted loss of $0.90/share vs. $0.07 EPS consensus miss
• Sector peer Valero (VLO) drops 3.1%, amplifying refining sector volatility

Phillips 66’s sharp intraday decline breaks through critical technical support, fueled by mixed Q1 results and shifting analyst sentiment. The stock trades near its 50-day moving average at $120.37, with intraday volatility between $124.19 and $128.54 marking a pivotal crossroads for short-term momentum.

Analyst Downgrade and Mixed Earnings Trigger Sell-Off
Citigroup’s downgrade to Neutral, despite a $130 price target hike, underscored concerns about medium-term crack spread pressures. This coincided with Phillips 66’s Q1 adjusted loss of $0.90/share, driven by accelerated depreciation and refining margin headwinds. While Raymond James and Evercore maintained Buy ratings, the consensus Moderate Buy rating now faces skepticism as the company’s $108.73 GF Value estimate implies a 15% downside. The combination of near-term earnings uncertainty and analyst repositioning created a liquidity-driven selloff.

Oil & Gas Refiners Under Pressure as Valero Slides
The refining sector faces synchronized headwinds, with Valero Energy (VLO) falling 3.10% alongside PSX’s decline. Both stocks reflect broader concerns about refining margin stability and capital allocation priorities. While PSX’s midstream and chemicals segments showed resilience, Valero’s exposure to Gulf Coast refining dynamics amplifies sector-wide volatility. The sector’s 52-week lows suggest investors are pricing in prolonged macroeconomic uncertainty for energy manufacturing.

Technical Indicators Signal Support at $124; Options Highlight Near-Term Volatility
Bollinger Bands: Current price ($125.34) near lower band ($116.08) signals oversold conditions
RSI: 67.86 (overbought threshold at 70)
MACD: Positive crossover (3.41 vs. 3.10 signal line) suggests short-term bullish bias
200-day MA: $121.46 (key support if breached)

Traders should focus on $124.19 (intraday low) as critical support. A close below $120.37 (50-day MA) would invalidate short-term bullish momentum. The ProShares Ultra Oil & Gas ETF (CRDE) offers 2x leverage for sector exposure.

Top Option Pick 1: PSX20250725P120
Put option with strike $120, expiring July 25. Key stats: IV 37.74%, leverage 105.91%, delta -24.65%, theta -0.09, gamma 0.040. This contract benefits from theta decay and proximity to support levels. In a 5% downside scenario (ST=$119.07), payoff = $0.93 per contract, yielding 96.67% return on premium.
Top Option Pick 2: PSX20250725P122
Put option at $122 strike. Stats: IV 35.02%, leverage 78.11%, delta -32.67%, theta -0.086, gamma 0.0498. The high gamma amplifies delta sensitivity in volatile environments. At $119 price, payoff = $3.00 per contract (77.78% return).
Aggressive shorts should layer PSX20250725P120 into a $124 breakdown, while bullish players may consider covered calls using PSX20250725C123 (delta 61.60%) as volatility stabilizes.

Backtest Phillips 66 Stock Performance
The backtest of the Philippine Stock Exchange (PSX) after an intraday plunge of -2% shows favorable short-to-medium-term performance. The 3-day win rate is 52.80%, the 10-day win rate is 50.59%, and the 30-day win rate is 53.14%. Although the returns are modest, with a maximum return of 0.23% over 30 days, the index demonstrates a tendency to recover modestly after such events.

Watch for $120 Support as Analysts Reconcile Outlook
Phillips 66 faces a critical test at $120, where institutional buying and technical support converge. Analysts must reconcile diverging views – Citigroup’s caution vs. Raymond James’ $142 target – against Q2 earnings catalysts. Sector leader Valero’s 3.1% decline highlights refining’s macro vulnerability, but PSX’s midstream accretion from the EPIC NGL acquisition provides long-term tailwinds. Traders should monitor $124 resistance recovery and GF Value’s $108.73 discount as contrarian signals. Immediate action: If $120 holds, rotate into PSX20250725C123 calls; if broken, prioritize PSX20250725P120 puts.