U.S. refiner Valero Energy Corp's (VLO.N) top boss said on Thursday he expected fuel consumption to benefit from pent-up demand for travel in the summer, shrugging off a larger quarterly loss wrought by a winter storm that hit its Texas operations.
The rapid roll-out of COVID-19 vaccines and easing travel restrictions over the last few months have helped fuel demand tick up from the record lows hit last year, lifting the outlook for refiners.
"As we head into summer, we believe that there's a pent-up desire among much of the population to travel and take vacations, which should drive incremental demand for transportation fuels," Chief Executive Officer Joe Gorder said on a post-earnings call.
He said gasoline and diesel demand were already back to 93% and 100% of the levels they were at before the pandemic.
"We're pretty bullish on gasoline going forward," Chief Commercial Officer Gary Simmons said, citing that people were increasingly preferring using private vehicles over public transportation.
The company's refining margins surged 33% sequentially to $1.45 billion in the first quarter thanks to a shrinking inventory and rising product demand.
Simmons also said domestic jet fuel demand, which constitutes 81% of the total, could make a quick recovery but international consumption would take longer.
The sector faces risks from surging coronavirus cases in countries such as India and Japan that could hit fuel consumption.
Valero, the first U.S. refiner to post quarterly results, reported a loss of $1.73 per share, as it took a $1.15 per share hit from the cold snap in Texas in February that disrupted energy supply and sent many refineries offline.
Analysts had expected a $1.89 per share loss, Refinitiv IBES data showed.
The company's refining throughput fell nearly 8% sequentially to 2.4 million barrels per day.
"If market senses that full product demand recovery in the U.S. is around the corner, refining equities have material upside," Credit Suisse analyst Manav Gupta said.
Valero also said it had sold a near 25% interest in the Pasadena marine terminal joint venture along the Houston Ship Channel for $270 million. It will retain a 25.01% stake in the project.
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