By Arunima Kumar
(Reuters) -Marathon Petroleum beat estimates for third-quarter profit on Tuesday, as soaring demand for refined fuel amid already-tight supplies helped offset a decline in refining margins.
Shares of the top U.S. refiner by capacity rose 1.3% to $148.75 in premarket trading.
Demand for refined products remained high during the quarter after voluntary production cuts from top OPEC+ oil producers Saudi Arabia and Russia, low levels of crude stockpile in the U.S. and increased exports kept supplies tight.
Marathon said crude capacity utilization was 94%, resulting in a total throughput of 3 million barrels per day (bpd) for the reported quarter. It expects a total refinery throughput of 2.89 million bpd for the fourth quarter.
However, the refining and marketing margin fell 13.4% to $26.16 per barrel for the July-September quarter, compared with last year.
Oil prices, which have eased from last year's highs that were driven by the Russia-Ukraine conflict, squeezed margins for U.S. refiners in the reported quarter.
The crack spread, a key gauge of refiner profits that measures the difference between crude oil prices and selling prices of finished products, fell about 35% in the third quarter.
"Fourth quarter will be heavier on maintenance across the Marathon refining system, leading to lower utilization, particularly on the West Coast...the financial outlook for Marathon remains strong despite the weaker refining margin outlook in recent weeks," said Third Bridge analyst Peter McNally.
Rivals Valero Energy (NYSE:VLO) and Phillips 66 (NYSE:PSX) also reported a hit from lower refining margins on their quarterly results.
Marathon reported an adjusted net income of $8.14 per share for the three months ended Sept. 30, cruising past analysts' average estimate of $7.75 per share, according to LSEG data.
The company last week also increased its quarterly dividend by 10% and announced an additional $5 billion share repurchase program.