Texaco owner Valero reports bigger-than-expected profit

Texaco owner Valero Energy reported a bigger-than-expected quarterly profit as the US refiner continued to benefit from low crude costs.

Crude oil prices have remained depressed for the past two years, lowering costs for refiners and weighing on prices for refined products, which has boosted consumer demand.

"We are also encouraged by ample supplies of medium and heavy sour crude oils in the market, which should help to expand their discounts relative to Brent crude oil, and by a positive demand outlook," chief executive Joe Gorder said in a statement on Tuesday.

However, crack spreads – the difference between the prices of crude oil and refined products – have narrowed sharply due to a spike in gasoline and distillate inventories in the United States.

This has hurt refining margins. Valero’s refining throughput margin fell to $8.93 a barrel in the second quarter ended June 30th, from $13.71 a barrel a year earlier.

Net income attributable to shareholders fell to $814 million, or $1.73 a share, in the latest quarter, from $1.35 billion, or $2.66 per share, a year earlier.

Operating revenue fell 22 per cent to $19.58 billion, but total costs and expenses fell by a fifth.

Excluding items, Valero reported earnings of $1.07 a share, beating analysts' average estimate of $1, according to Thomson Reuters I/B/E/S. – (Reuters)