Berkshire amasses $4.5 billion stake in Phillips 66

HOUSTON| SEATTLE: Warren Buffett's Berkshire Hathaway sees a green light at the intersection of low oil prices and record driving.

In its most significant energy investment in two years, Berkshire has amassed a $4.5 billion-stake in Phillips 66, making it the biggest shareholder in the largest United States oil refiner.

Berkshire owns almost 58 million shares in Phillips 66, more than 10 per cent of the total outstanding, up from the 7.5 million it reported at the end of the first quarter, according to a regulatory filing issued late Friday by the Omaha, Nebraska-based company.

The bet on Phillips 66 is a wager that an unexpected and significant rally by refiners during the shale boom will continue as low oil prices spur demand for gasoline, diesel and other petroleum products produced by the so called downstream sector. Since oil fell by half last year, gasoline demand in the US has surged to an eight-year high, as drivers see per gallon prices fall below $3 and take to the road. "As oil prices have dropped, it's obvious to people in the business that refiner stocks are your best bet," Carl Larry, head of oil and natural gas for Frost & Sullivan, said by phone from Houston.

An index of four refiners on the S&P's 500 is up 12 per cent this year, compared with the larger energy index, which is down 18 per cent. Phillips 66 closed at $77.23 on Friday in New York, up 7.7 per cent this year.

The increase at Phillips 66 has trailed the results of some other US refiners Valero Energy Corp has gained 19 per cent this year and Tesoro Corp has climbed 26per cent. Marathon Petroleum Corp is up 4.6 per cent for the year.