Valero’s refining margin trend
Valero Energy (VLO) saw an increase in its GRM (gross refining margin) to $8.1 per barrel in 1Q17, compared with $7.7 per barrel in 1Q16. VLO’s operating costs grew by $0.44 per barrel YoY in 1Q17.
The rise in VLO’s GRM was offset by a surge in its operating costs, leading to a stable net refining margin of $2.5 per barrel in 1Q17.
The most important factors influencing Valero’s GRM include refined product cracks, the costs of other feedstocks and blendstocks, and the sweet-sour crude oil spreads. Gasoline and diesel cracks in 1Q17 increased in the US West Coast, the US Gulf Coast, the US Mid-Continent, and North Atlantic.
The Brent-WTI (West Texas Intermediate), Brent-ANS (Alaska North Slope), Brent-Maya, and Brent-LLS (Louisiana Light Sweet) oil spreads also grew in 1Q17 over 1Q16.
VLO’s peers also witnessed rises in their refining margins in 1Q17. Marathon Petroleum’s (MPC) gross refining and marketing margin rose $1.8 per barrel over 1Q16 to $11.7 per barrel in 1Q17. Tesoro (TSO) saw an increase in GRM by $1.9 per barrel YoY to $9.4 per barrel in 1Q17, while Phillips 66’s (PSX) worldwide refining margin rose $1.4 per barrel, or 20%, over 1Q16 to $8.6 per barrel in 1Q17.
Continue to the next part for a look at Valero’s refining margin outlook for 2Q17.