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Refiner Valero's profit beats but margins stay under pressure

Valero’s Houston refinery at night. Photo courtesy of Valero.

(Reuters) US refiner Valero Energy Corp. reported a quarterly profit that beat analysts' reduced estimates, even as the company's refining margin continued to be gutted by a spike in gasoline and distillate inventories.

Like other independent refiners, Valero has been struggling with record supplies of gasoline and diesel products in the US that has weighed on prices for refined products.

Refining throughput margin fell to $8.93/bbl in the second quarter ended June 30 from $13.71/bbl a year earlier, Valero said on Tuesday.

Analysts have in recent weeks slashed second-quarter estimates of refiners, with several predicting that refiners may have to take more drastic action to protect margins and force a drawdown of stockpiles.

Valero also said biofuel blending costs more than tripled to $173 M in the latest quarter, primarily due to the purchase of biofuels compliance credits known as Renewable Identification Numbers (RIN).

The company said it continues to expect such costs to be in the range of $750 M to $850 M this year.

The company's compliance credit costs were $440 M in 2015, according to filings reviewed by Reuters.

Reporting by Amrutha Gayathri and Swetha Gopinath; Editing by Sriraj Kalluvila

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