Phillips 66 reported a third-quarter profit on Friday that missed analysts’ estimates, hurt by lower refining margins on easing demand following the peak summer season.

Oil prices, which have been trading well below last year’s high, squeezed margins in the quarter. The 3-2-1 crack spread CL321-1=R, a proxy for refining margins, fell around 35% during the period.

Phillips 66’s realized margins fell to $18.96 per barrel in the third quarter from $26.87 per barrel a year earlier.

Rival Valero Energy VLO.N said on Thursday its quarterly refining margins fell 8.2%.

Additionally, U.S. oil refiners that cranked up processing this year were being hit by outages weighing on their ability to rebuild thin fuel stockpiles, driving up fuel prices.

Phillips 66’s crude utilization rate was 95% in the quarter, higher than last year’s 91%, while total processed input rose to 1.95 million barrels per day (bpd) from 1.91 million bpd.

The refiner, which also raised its shareholder return target to a range of $13 billion to $15 billion, said on Friday it plans to generate $3 billion by monetizing non-core assets.

Phillips 66, which owns nine refineries and is a 50% co-owner of two others in the United States, said net cash flow from operating activities fell to $2.69 billion from $3.14 billion.

On an adjusted basis, the company earned $4.63 per share, compared with estimates of $4.76, according to LSEG data.
Source: Reuters (Reporting by Seher Dareen in Bengaluru; Editing by Shounak Dasgupta)