(Reuters) U.S. refiner Marathon Petroleum Corp reported a 63% drop in second-quarter profit on Tuesday, as improved fuel supplies and slowing economic activity compressed its margins.
Despite resilient fuel demand in the U.S., an increase in global refining capacity over the last year and slowing economic activity has brought the market down from the peaks in 2022.
Distillate fuel prices, which soared after Russia’s invasion of Ukraine, have fallen on easing uncertainty over how subsequent sanctions would affect the market, said Brian Partee, senior vice president at Marathon.
“The market came off pretty precipitously since the beginning of the year, and now we’re seeing it recover to a more fundamental level,” Partee said on the company’s earnings call early Tuesday.
Marathon said crude capacity utilization fell to 93% from 100% a year earlier, with planned maintenance in the Mid-Continent and West Coast regions resulting in total throughput of 2.9 million barrels per day (bpd) for the quarter ended June 30.
The refiner projected crude throughput of 2.7 million bpd, or 94%, for the third quarter due to lower turnaround activity.
Marathon said it expects the 75,000 bpd reformer at the Galveston Bay Refinery in Texas, which shut in May after a deadly fire, to remain offline throughout the quarter.
Marathon’s refining and marketing margin dropped to $22.10 per barrel from $37.54 in the year-ago quarter.
Net income attributable to the Findlay, Ohio-based refiner fell to $2.2 billion, or $5.32 per share, from $5.9 billion, or $10.95 per share, over the same period.
On an adjusted basis, earnings of $5.32 per share beat analysts’ average estimate of $4.59, on the back of lower refining costs and tax rates.
Rival Valero Energy Corp last week also reported weaker quarterly profits as refining margins came under pressure, but it beat estimates on strength in its renewable diesel business.
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