U.S. refiner Valero Energy Corporation (NYSE: VLO) reported on Wednesday a net loss of $1.9 billion for Q1, compared to a profit for the same period last year, after it took a $2-billion hit in the value of its inventory.

Valero Energy?posted?a net loss attributable to Valero stockholders of $1.9 billion, or $4.54 per share, for the first quarter of 2020. This compares to net income of $141 million, or $0.34 per share, for the first quarter last year.

The refiner reported an after-tax lower of cost or market, or LCM, inventory valuation adjustment of around $2.0 billion. This was the result of the market value of Valero's inventories as of March 31, 2020, falling below their historical cost, ?with the decline in market value resulting from the decline in crude oil and product market prices associated with the negative economic impacts from COVID-19,? the company said.

Valero Energy's refining segment booked an operating loss of $2.1 billion for the first quarter of 2020, compared to $479 million of operating income for Q1 2019.

Looking forward, Valero expects to invest around $2.1 billion of capital this year, down by $400 million from the prior guidance. The $2.1 billion includes capital expenditures for turnarounds, catalysts, and joint venture investments.

?It's been a very challenging start to the year with significant impacts to families, communities and businesses world-wide brought on by the COVID-19 pandemic,? Joe Gorder, Valero Chairman and Chief Executive Officer, said in a statement.

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With the lockdown-induced demand collapse, refiners in the United States have been?cutting refinery runs?over the past month. China is now processing more crude oil at its refineries than the world's top oil consumer, the United States, according to?data from OilX.?

Gasoline prices in the U.S.?continue to fall?due to the oil price slump, but demand is cratering. The EIA reported demand at 5.3 million bpd last week, a slight increase, ?but still an extremely low rate compared to last April's 9.45 million b/d average,? AAA said this week. AAA believes that the national average could continue to decrease into May, possibly dropping as low as $1.65 a gallon.

?We haven't seen gas prices that cheap since January 2009,? AAA spokesperson Jeanette Casselano said.??

By Tsvetana Paraskova for Oilprice.com

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