Valero Energy’s Quarterly Profit Falls on Lower Fuel Prices

Reuters

(Reuters) – Valero Energy reported a fall in quarterly profit on Thursday as a slowdown in fuel demand hurt prices, kicking off earnings for U.S. refiners on a dour note.

Weaker economic activity and an increase in global refining capacity last year pulled back refining profits from record heights touched in 2022, when disruptions to global supplies following Russia’s invasion of Ukraine had driven up fuel prices.

Fuel inventories have swelled, dragging down prices and refining margins. Gasoline stockpiles climbed 5% to 237 million barrels in the fourth quarter, 1.7% above the 10-year seasonal average calculated by the U.S. Energy Information Administration (EIA).

San Antonio, Texas-based Valero said its refining margins for the fourth quarter fell to $3.55 billion from $6.32 billion a year ago.

Total refinery throughput volumes averaged 3 million barrels per day in the quarter, compared with 3.04 million bpd last year.

Still, U.S. fuelmakers were running refineries at 93% utilization in recent weeks to meet seasonal distillates demand and make up for downtime during the fall.

Demand for distillate fuels such as diesel and heating oil usually peaks in winter due to increased heating needs in residential, commercial and industrial sectors.

Valero posted net income attributable to stockholders of $1.2 billion, or $3.55 per share, for the three months ended Dec. 31, compared with $3.11 billion, or $8.15 per share, last year.

Analysts were expecting a profit of $2.96 per share, according to LSEG data.

Its ethanol segment reported a jump in operating income for the fourth quarter to $190 million, boosted by higher production volumes and lower corn prices during the quarter.

Valero shares were up marginally in premarket trading.

Reporting by Sourasis Bose in Bengaluru; Editing by Devika Syamnath

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