By Arunima Kumar
(Reuters) -Refiner Valero Energy Corp (NYSE:VLO) zoomed past quarterly profit estimates on Thursday, as margins received a boost from sustained fuel demand and tight crude supplies.
Refiners have been riding a wave of favorable pricing and demand as pandemic-era closings boosted margins.
Valero said its refining margins for the January-March quarter soared 84% from a year earlier to $5.9 billion.
Higher demand for products have also helped, with jet fuel recently surging higher after China re-opened its economy following long COVID-induced lockdowns.
"Looking ahead, we expect refining fundamentals to remain supported by low global light product inventories, tight product supply and demand balances and continued increase in product demand as we approach peak air travel and summer driving season," said Joe Gorder, Valero's CEO, on a call.
Valero, the second-largest U.S. refiner by capacity, said total refinery throughput volume averaged 2.9 million barrels per day (bpd) in the quarter, marginally higher than 2.8 million bpd a year earlier.
Its shares fell 1.6% to $114.78.
U.S. oil refiners dialed back operating runs as they catch up on maintenance activities during the quarter after sky-high utilization rates last year to keep up with demand recovery.
They had scaled back maintenance work in 2020 and 2021 to reduce the risk of contractors bringing in the COVID-19 virus.
Valero operated at 93% capacity utilization rate in the first quarter, despite planned maintenance at several of its facilities.
"Valero started the year with another strong quarter... as refining maintained strong margins and overall throughput came in above our estimate," said TJ Schultz, analyst at RBC Capital Markets.
The refiner returned over $1.8 billion to stockholders through dividends and stock buybacks in the reported quarter.
Wall Street analysts viewed the results as positive.
The company reported adjusted net income of $8.27 per share for the three months ended March 31, topping analysts' average estimate of $7.23 per share, according to Refinitiv data.