Before markets open on Wednesday morning, Valero Energy Corp. (NYSE: VLO) is scheduled to release third-quarter results. The consensus estimates for the oil refiner and ethanol maker call for earnings per share (EPS) of $2.66 on revenues of $18.23 billion. In the third quarter of 2014 the company posted EPS of $2.00 on revenues of $34.41 billion.

Refiners have had an easier time making profits in the low crude oil price regime, and there is little reason to believe the third quarter will be any different. Judging from the rising EPS estimates for the past 3 months (up more than $2.50 per share since late July), analysts are expecting another big quarter.

The less-good news for Valero and other ethanol makers is that ethanol pricing hit a low of around $1.41 a gallon in late August and managed to climb back to around $1.53 by the end of September. It could have been much worse, so the ethanol makers will take what comfort they can in futures prices that have bounced back to around $1.60 a gallon.

Retail gasoline prices have also been coming down again, but refining margins have been strong. BP reported a third-quarter refiner marker margin of $20 a barrel compared with a margin of $15.60 in the prior year’s third quarter. BP’s average realized price per barrel of oil in the third quarter was $44.01 compared with $91.42 in the third quarter of last year. One doesn’t have to be a math professor to see that with a crude oil price of less than $65 a barrel, refining is a darn good business.

The four most recent analyst calls appear to agree:

• Citigroup reiterated a Buy rating and its $74 price target
• Deutsche Bank reiterated a Buy rating but lowered the price target from $82 to $81
• Credit Suisse maintains an Outperform rating and raised its price target from $75 to $80
• Raymond James lowered its price target from $73 to $70

Valero’s shares traded up about 1% in the mid-afternoon on Tuesday at $62.48 in a 52-week range of $43.45 to $71.50.

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