By Arunima Kumar
(Reuters) -U.S. refiner Phillips 66 (NYSE:PSX) beat Wall Street estimate for first-quarter profit on Wednesday, joining rivals in gaining from elevated margins on sustained fuel demand amid tight crude supplies.
The company's shares rose 1.3% to $95.98 in morning trade.
Profits from turning crude oil into gasoline, diesel and jet fuel surged as supplies remained tight due to pandemic-era closure of facilities and a recovery in demand.
Margins were also supported by Russia's invasion of Ukraine last year that further tightened supplies.
Realized margins soared 91% to $20.72 per barrel in the first quarter from a year earlier, Phillips 66 said.
Margins jumped nearly 71% at Marathon Petroleum (NYSE:MPC) and 84% at Valero Corp, helping the company's rivals report bumper first-quarter profits that also beat estimates.
Phillips 66's crude utilization rate was 90% in the reported quarter, marginally higher than last year's 89%, while total processed input fell to 1.8 million barrels per day (bpd) from 1.9 million bpd.
"Refining drove the beat...We expect 2023 to be a lower turnaround year for PSX, with most of the work front-loaded in 1Q," said RBC (TSX:RY) Capital Markets analyst TJ Schultz.
U.S. refiners took up major maintenance activities during the first three months of 2023 after running their facilities at almost full capacity last year to keep up with the recovery in demand.
"We ran above industry-average crude utilization, successfully executed major turnarounds and increased market capture to 93%," Phillips 66's CEO Mark Lashier said in a statement.
The Houston-based refiner reported adjusted earnings of $4.21 per share for the three months ended March 31, compared with average analyst estimate of $3.56, according to Refinitiv data.