Refiner Valero’s quarterly profit slumps on margins hit

July 27 (Reuters) – Valero Energy Corp’s (VLO.N) second-quarter profit slumped as improved fuel supplies following an increase in global refining capacity against the backdrop of slowing economic activity weighed on its refining margins.

Refining margins fell $4.22 billion in the April-June quarter from $8.09 billion a year earlier, the company said on Thursday.

Oil production cuts from OPEC+ in the second quarter also weighed as it removed heavy, sour barrels from the market that U.S. refiners usually buy cheaply to make a higher profit off fuel sales.

The company said total refinery throughput volumes averaged 2.96 million barrels per day in the quarter, roughly same as last year. Capacity utilization rate of 94% were also in line with last year.

Net income attributable to the company’s stockholders was $1.9 billion, or $5.40 per share, for the three months ended June 30, compared with $4.7 billion, or $11.57 per share, a year earlier.

However, the company beat analysts’ average estimates of $5.08 per share, according to Refinitiv data.