(Bloomberg) -- Valero Energy Corp. has seen refining margins return to pre-pandemic levels, with the rebound helping the U.S. fuel producer post quarterly profit that topped analysts’ expectations.

Margins on refining more than doubled to the highest level in two years during the fourth quarter, the San Antonio-based company said Thursday in its quarterly earnings statement. Valero Energy had net income of $1 billion in the quarter, reversing a loss of $359 million a year earlier and beating analysts’ estimates.

The result underscores the recovery of one of the hardest-hit industries during the coronavirus pandemic, when stay-at-home orders sent demand for fuels plummeting. The revival in driving across the U.S. has helped refining companies return to overall profitability and slash the debt glut built during the crisis even as jet fuel demand remains curbed.

“We saw continued improvement in our business during the fourth quarter with margins supported by strong product demand,” Chief Executive Officer Joe Gorder said in the statement. Tight fuel inventories globally, strong demand and constrained refining capacity should continue to support profits, he said. “Looking ahead, we remain optimistic on refining margins.”

Profits were also buoyed by a surge in ethanol prices. The segment’s operating income surged to $474 million in the quarter, up from $15 million a year earlier. 

Valero Energy, the first refiner to report earnings in the season, may be seen as the bellwether for rivals reporting subsequently because its geographic footprint “mimics” the U.S. refining system, Mizuho Financial Group Inc said in a report.

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