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(Reuters) – Refiner Valero Energy beat first-quarter profit estimates on Thursday, benefiting from sustained demand as crude supplies remained tight due to disruptions in Russia and maintenance work at U.S. refineries.
Crude supplies came under pressure as Ukrainian drone attacks had shut about 14% of Russia’s refining capacity, as of the end of the March quarter.
Despite the disruptions, overall U.S. product supplied, a proxy for demand, averaged at 20.10 million barrels per day (bpd) at the end of March, compared with 19.7 million bpd a year earlier, according to U.S. Energy Information Administration data.
“We are pleased to report strong financial results for the first quarter despite heavy planned maintenance across our refining system,” Valero Chief Executive Officer Lane Riggs said in a statement.
U.S. refiners routinely schedule maintenance in the first-quarter to prepare equipment for high demand in the summer driving season.
Valero, which kicked off earnings for refiners, said its margins stood at $3.53 billion in the quarter ended March 31, compared with $5.9 billion a year earlier.
Margins and profits of U.S. refiners have normalized after hitting sky-high levels in 2022, when Russia’s invasion of Ukraine disrupted crude supplies. Weaker economic activity and an increase in global refining capacity have further stabilized their earnings.
Valero’s refining throughput volumes averaged 2.8 million barrels per day in the first quarter, compared with 2.9 million bpd a year earlier.
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The refiner reported an adjusted net income of $3.82 per share, above analysts’ average estimate of $3.24 per share, according to LSEG data.
Valero also said its sustainable aviation fuel project, DGD Port Arthur plant, is now expected to be operational in the fourth quarter, ahead of its earlier target of 2025.
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