Valero lifting refining rates

Valero will lift refining rates closer to year-ago levels in the final months of 2020, the company said today.

Fuel demand is improving, chief executive Joe Gorder said on a quarterly earnings call. But the demand shock triggered by Covid-19-related restrictions means lower crude production and thinner discounts pressuring refining margins.

Valero's midcontinent refineries — typically the company's strongest-performing region — and US Gulf coast facilities reported margins of less than half of year-ago levels. Hurricane damage to electrical infrastructure in the third quarter limited operations at Valero's 335,000 b/d refinery in Port Arthur, Texas.

Sweet crude throughputs rebounded across the Valero system, climbing to 56pc of its total throughput after falling to 50pc in the previous quarter. The discount for US Gulf coast sour benchmark Mars to Light Louisiana Sweet (LLS) narrowed to 46¢/USG during the quarter — erasing advantages for running sour crudes with the thinnest discounts for sour in at least nine years. Heavy crude processing sank to 14pc after a surge in sour crude processing in the second quarter.

Valero reported a $464mn loss for the quarter, down from a $609mn profit in the same quarter of last year.

By Elliott Blackburn