Marathon Petroleum (MPC.N) exceeded expectations in its third-quarter earnings report, benefiting from surging demand for refined fuel in the face of already tight supplies, which helped offset a decline in refining margins.
In premarket trading, shares of the leading U.S. refiner by capacity rose 1.3% to reach $148.75.
During the quarter, the demand for refined products remained robust due to voluntary production cuts from major OPEC+ oil producers such as Saudi Arabia and Russia.
Low crude stockpiles in the United States and increased exports also contributed to the tight supply conditions.
Marathon Petroleum reported that its crude capacity utilization stood at an impressive 94%, resulting in a total throughput of 3 million barrels per day (bpd) for the quarter.
For the upcoming fourth quarter, the company expects a total refinery throughput of 2.89 million bpd.
Nevertheless, the refining and marketing margin experienced a 13.4% decline, falling to $26.16 per barrel for the July-September period compared to the previous year.
This dip in profitability was attributed to lower oil prices, which, despite easing from the highs seen in the wake of the Russia-Ukraine conflict, squeezed margins for U.S. refiners throughout the reported quarter.
The crack spread, a pivotal indicator of refiner profits that gauges the difference between crude oil prices and finished product selling prices, dropped by approximately 35% in the third quarter.
Peter McNally, an analyst at Third Bridge, noted that the fourth quarter would involve more maintenance activities across the Marathon refining system, leading to reduced utilization, particularly on the West Coast.
Nonetheless, he expressed confidence in Marathon’s financial outlook, which remained strong despite the recent weaker refining margin outlook.
Marathon Petroleum reported an adjusted net income of $8.14 per share for the three months ending on September 30, surpassing the average estimate of $7.75 per share from analysts, according to data from LSEG.
Additionally, the company recently announced a 10% increase in its quarterly dividend and unveiled an additional $5 billion share repurchase program.