* Beats Q3 profit on higher margins
* Completes Diamond Green Diesel 2 expansion
Oct 21 (Reuters) - Valero Energy Corp predicted on
Thursday low inventories and a recovery in fuel demand to
pre-pandemic levels could support higher refining margins,
shrugging off a recent rally in crude prices.
Gasoline and distillate consumption in the United States is
back in line with five-year averages after more than a year of
weak demand due to the pandemic that had also knocked refining
"Looking ahead, we continue to have a favorable outlook on
refining margins as a result of low global product inventories,
continued demand recovery and global balances supported by the
significant refinery capacity rationalization seen over the last
1.5 years," Chief Executive Officer Joe Gorder said.
The bullish prediction could bode well when other major
refiners, including Marathon Petroleum and Phillips 66
report in coming weeks.
The first major U.S. refiner to report quarterly earnings,
Valero's third-quarter refining margin was $2.597 billion,
compared with $952 million in the previous year.
Total U.S. light product inventories are at five-year lows,
while demand is over 95% of 2019 levels, the company said in a
call with analysts, forecasting gasoline and diesel consumption
to return to pre-pandemic levels in 2022.
Valero said its refining throughput, or the amount of crude
it processed, rose 13.4% to 2.86 million barrels per day (bpd)
in the quarter.
The company's shares rose 2.3% in morning trading, before
paring gains. They have risen about 47% so far this year.
The company reported net income attributable to its
stockholders at $463 million, or $1.13 per share, for the three
months ended Sept. 30. Valero posted a loss of $464 million, or
$1.14 per share, a year earlier.
Excluding items, Valero posted a profit of $1.22 per share,
beating analysts' average estimate of 92 cents per share,
according to Refinitiv IBES.
San Antonio, Texas-based Valero also said the Diamond Green
Diesel expansion project at its St. Charles, Louisiana refinery
(DGD 2), projected to increases renewable diesel production
capacity by 400 million gallons per year, was completed in the
third quarter and is starting up.
(Reporting by Arunima Kumar in Bengaluru; Editing by Arpan