Valero’s Solid Q1 Refining Margins Amid Maintenance Tightening Supply

Valero Energy (NYSE:VLO) marked a rise of 3.3% on Thursday following the announcement of its anticipation of strengthened Q1 U.S. refining margins. This boost is attributed to the limited supply caused by numerous turnaround projects in preparation for the summer driving season, as reported by Dow Jones.

The executives of Valero (VLO) expressed their optimism about the near-term margins for gasoline and diesel during the post-earnings conference call. They emphasized the influence of robust domestic demand and substantial export volumes in this forecast, according to Dow Jones.

President and CEO Lane Riggs asserted during the call, “In the near term, product inventories ahead of the summer driving season are expected to be constrained with heavy industry-wide turnaround activity in the first quarter, providing support to refining margins,” highlighting a positive outlook for the market.

Valero (VLO) mentioned that its 14 refineries are planned to operate at 83%-86% of combined total throughput capacity in Q1, following a Q4 2023 performance of 94%.

COO Gary Simmons added during the call that while the company’s wholesale gasoline volumes in Q1 have dipped slightly compared to last year due to recent cold weather dampening demand, strong exports have fueled optimism for gasoline margins as the driving season approaches in the spring.

Additionally, Simmons noted that demand for diesel on Valero’s (VLO) system during this quarter has surged by approximately 7% from a year ago. This is partly due to low inventories and increased heating demand in the U.S. and Europe, further reflecting a positive trend for the company.