By Vallari Srivastava
Jan 29 (Reuters) – U.S. refiner Valero Energy surpassed Wall Street expectations for fourth-quarter profit on Thursday, on the back of a rebound in margins as well as higher throughput volume.
Shares of the second largest U.S. refiner by capacity rose over 2% to $187.81 before the bell.
During the fourth quarter, U.S. refining margins, measured by the 3-2-1 crack spread, rebounded from the multi-year lows seen in 2024, when profits eased from post-pandemic highs due to supply disruptions from Russia’s invasion of Ukraine.
The company’s refining margin per barrel of throughput surged over 61% to $13.61 in the quarter, while average throughput volume rose slightly to 3.1 million barrels per day, from 2.9 million bpd a year earlier.
Valero kicked off the earnings season for U.S. refiners, as the energy sector prepares to boost output in Venezuela after the Trump administration outlined a long-term plan urging companies to spend $100 billion to revive the country’s oil industry.
UBS analyst Manav Gupta said Valero is the best positioned company among refiners to benefit from more Venezuelan barrels coming into the U.S.
Analysts have said a regime change in Venezuela could result in wider crude differentials.
“A $3 per barrel wider heavy-light spread would result in at least $600 million increase in earnings upside for Valero,” Gupta added.
Valero said it was progressing with the FCC Unit optimization project at the St. Charles Refinery to enhance its ability to produce high-value products. The project is expected to cost $230 million and be completed in the second half of the year.
The Houston, Texas-based company posted an adjusted profit of $3.82 per share for the three months ended December 31, compared with analysts’ expectations of $3.27 per share according to data compiled by LSEG.
(Reporting by Vallari Srivastava in Bengaluru; Editing by Krishna Chandra Eluri)
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