Valero Swings to a Loss; Shares Sour

SAN ANTONIO (TheStreet) -- Crude refiners have had a well-documented tough year, as demand for refined crude products remains weak amidst a sea of inventory and oil prices continue to track higher. Case in point is Valero Energy(VLO Quote), which swung to a wider-than-expected loss in the third-quarter.

According to an earnings release issued Tuesday morning, Valero posted a loss of $489 million, or 87 cents a share. At the same time in 2008, the country's largest refiner managed a $1.2 billion profit, or $2.18 cents a share.

Excluding certain items brought the loss to a slimmer 39 cents a share during the third-quarter. Still, that sum was wider than the 33-cent loss expected by many analysts, according to Thomson Reuters.

Revenue also fell 46% from the year-earlier quarter to $19.49 billion.

As refining margins slumped and cost-cutting moves highlighted the third-quarter, Valero CEO Bill Klesse attempted to sound a bit more optimistic about future prospects.

"As we strive to lower costs and become even more competitive, we expect the improving world economy will drive demand growth for our products and support a recovery in refining margins and sour crude discounts," Klesse said in a press release. "We view 2009 as a trough period for refined product demand, and we look forward to an upturn in fundamentals and demand in 2010."

Investors weren't buying it, at least in Monday's premarket trading, as shares were down 2.1%.

-- Written by Sung Moss in New York

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