Valero to Hold Lower Refining Rates

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Valero to Hold Lower Refining Rates

SAN ANTONIO -- Valero Energy Corp., operator of more than 2,300 convenience stores and 12 refineries in North America, said it plans to run its refineries below capacity through August due to a glut of fuel supplies.

Valero, which markets fuel under the Ultramar, Valero and Diamond Shamrock retail brands, said it would run its plants at roughly 89 percent -- a move that will cut out roughly 80,000 barrels per day (bpd) of fuel distillates production and 55,000 bpd of its gasoline production. The company said it is also evaluating further cuts in distillate production.

"Due to the high distillate inventories, we are currently evaluating the potential for additional reductions in distillate production," Valero said in a release. "As always, these cuts will be made in all regions except the West Coast."

Valero has been running its refineries at reduced rates since June, due to the high cost of heavy crude oil and then due to building distillate supplies, which have depressed profit margins. The company cut 23 percent of its capacity in June and 17 percent in July.

Valero is a leading independent U.S. refiner with 2 million bpd of refining capacity.

ABOVE: Valero's Jean Gaulin Refinery in Quebec, named after former Ultramar Diamond Shamrock Corp. Chief Executive Jean Gaulin.